HMDA and You

Yesterday's webcast on the implications of the release of data under the Home Mortgage Disclosure Act ("HMDA") was quite a success.

Although the intent of HMDA was to provide transparency on lending practices, perhaps its most significant effect will stem from the ability for mortgage lenders to use this as a new source of competitive data on 8,853 financial institutions. The data includes information on loan pricing and the type of loan (e.g. loans for manufactured housing, loans secured by first or subordinate liens, unsecured loans). If you're considering an acquisition, HMDA may prove to be an interesting source of due diligence data.

It seems that the only place where the data won't really have a definitive impact is in assessing whether a lender discriminates. In its Sept. 27 Financial Services Alert, Goodwin Proctor LLP writes:

The FFIEC emphasized in its press release that the HMDA data are not, by themselves, a basis for definitive conclusions regarding whther a lender discriminates unlawfully against particular borrowers or takes unfair advantage of them.

...

As a result, the FFIEC cautioned that conclusions from the HMDA data alone run the risk of being unsound, which in turn may reduce the data's effectiveness in promoting HMDA's objectives.

Write to me at [email protected] if you have any additional perspectives on this topic.

Oh yes, and do watch the webcast: Behind the Data: What Every Bank Should Know About HMDA.