HMDA Data May Bolster Case for New Agency

American Banker
September 9, 2009
Flitter, Emily
P. 1

Followers speculate that the latest analysis of Home Mortgage Disclosure Act (HMDA) data, due out this week, will lend credibility to the argument for a new consumer protection agency. The loan statistics previously have demonstrated how minorities receive fewer loans, but more high-cost mortgages, than white counterparts. An even bigger disparity in minority lending is anticipated in this year's results, a byproduct of the financial meltdown. "As a result of the recent tightening of credit, denial disparity rates will significantly increase," said Andrew Sandler, co-chairman of the law firm Buckley Sandler LLC. "The HMDA data will enhance the level of concern and discussion about fair lending, and necessarily, then, will focus attention on the role of the new agency in fair lending and the need for the new agency in terms of enhanced fair-lending protection." Banks and consumer advocates alike concur that the scope of information available under HMDA is inadequate; consumer groups want other data, from credit scores and income documentation to broker and lender compensation, included as well, but banks have balked at efforts to expand the law. The proposed new Consumer Financial Protection Agency (CFPA) proposed by the Obama administration would assume responsibility for HMDA collection and add new data points. "If the CFPA is created, we feel that that would be a very appropriate area for it to really develop requirements under HMDA," said National Community Reinvestment Coalition Executive Vice President David Berenbaum. Data collection and analysis also would be more effective under CFPA control, according to Center for Responsible Lending senior policy counsel Ellen Harnick. "The CFPA bill assumes that the new agency will be very data-based, that it's going to have a nontheoretical understanding of what is going on in the market so that the regulation is smart and focused, not overbroad, no missing the mark," she comments.

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