18 11, 2021

FedFin Analysis of: HMDA Rewrite

2023-05-26T10:31:04-04:00November 18th, 2021|The Vault|

The CFPB has followed a study earlier this year finding significant mortgage product and price discrepancies based on race or ethnicity with a request for input (RFI) on the HMDA data on which the study was based.  This is a preliminary effort with no immediate regulatory or supervisory consequences, but it likely presages a significant HMDA-regulatory rewrite in no later than 2023 to provide still more firepower for ongoing CFPB, Department of Justice, and bank-regulatory actions against credit discrimination and redlining.

The full report is available to retainer clients. To find out how you can sign up for the service, click here.…

8 09, 2021

FedFin on: Small-Business Lending Disclosures

2023-08-21T13:45:34-04:00September 8th, 2021|The Vault|

Turning again to a provision in the 2010 Dodd-Frank Act, the Bureau of Consumer Financial Protection has issued a sweeping proposal to implement small-business and small-farm lending disclosure requirements akin to those long required under the Home Mortgage Disclosure Act (HMDA).  Although the law focuses on lender reports to discern different loan-approval rates based on gender or ethnic/racial groups, the notice of proposed rulemaking (NPR) goes farther also to require extensive detail on loan amounts and pricing on approved loans a borrower chooses not to accept.  Data would be required from all but the very smallest bank and nonbank lenders.

The full report is available to retainer clients. To find out how you can sign up for the service, click here.…

7 09, 2021

Karen Petrou: The Coming Fair-Lending Fracas

2023-08-22T12:43:29-04:00September 7th, 2021|The Vault|

A week ago Thursday, I was honored to participate in a Congressional Black Caucus Foundation forum assessing the extent to which the Fed exacerbates U.S. economic inequality.  Views were mixed on that front, but several panelists stoutly condemned financial institutions for actively discriminating against people and communities of color and the Fed for allowing them to get away with it.  That won’t be the last we hear of this.

As our recent assessment of the latest mortgage data make clear, these allegations are not without merit.  That underlying factors are complex and sometimes include contradictory evidence does not belie the fact that data remain problematic, the industry is deeply distrusted, and the White House has made racial equity a top-priority Presidential action item.  First to what the data do and don’t show and then to what will be done about them unless some of the things that can instead be done are quickly done.

The latest HMDA data show troubling denial disparity ratios (DDRs), interest-rate, and cost disparities when minorities are compared to whites.  The DDR for Blacks was 2.6:1, rates were .125 percentage points higher, and the cost of a loan was 38% more.  Black credit scores were the lowest among demographic groups (690) and loan amounts were the smallest, but these differences are still striking.

Little noticed but even more puzzling are the DDRs for Asians versus whites.  Asian DDRs were 1.4:1 even though credit score and loan amounts were the highest of all demographic groups. …

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