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Subject: Home Mortgage Disclosure Act
Date: May 2, 2005
To: Chief Executive Officers and Compliance Officers of All National Banks, Federal Branches and Agencies, Department and Division Heads, All Examining Personnel, and Other Interested Parties
Description: Answers to Frequently Asked Questions About New HMDA Data
The Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System (Board), Federal Deposit Insurance Corporation, National Credit Union Administration, and Office of Thrift Supervision, (the agencies) along with the Department of Housing and Urban Development (HUD), have released a set of "Answers to Frequently Asked Questions" (FAQs) that address the Home Mortgage Disclosure Act (HMDA) new loan price data disclosed this year.
These new loan price data are intended to advance enforcement of consumer protection and anti-discrimination laws and improve mortgage market efficiency. The agencies and others can use loan price data and other HMDA data as screening tools for identifying disparities in the disposition of loan applications, including price disparities. Also, lenders, community groups, government agencies, and others can use the data to identify opportunities for private or public investment.
A full understanding of the data, including their limitations, will help ensure that the data are used effectively to advance the goals of HMDA. The data, for example, do not include certain determinants of credit risk that may explain higher loan prices, such as the borrower's credit history, loan-to-property-value ratio, and consumer debt-to-income ratio. Consequently, the HMDA data are not, by themselves, a basis for definitive conclusions regarding whether a lender discriminates unlawfully against particular borrowers or takes unfair advantage of them.
The FAQs are part of a larger effort by the agencies and HUD to promote the informed use of the 2004 data. The agencies also will engage in educational outreach to state and local agencies, trade associations, and consumer- and community-based organizations.
In September, the Federal Financial Institutions Examination Council will release the annual summary statistical reports for each lender and an aggregate report for each Metropolitan Statistical Area. Concurrently, staff of the Federal Reserve Board will publish an article analyzing the 2004 data in the Federal Reserve Bulletin.
Questions may be directed to the appropriate supervisory office or to the Compliance Policy Department, at (202) 874-4428.
Ann F. Jaedicke