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10 Blind Spots in Fair Lending Risk Management
Normally, when one thinks of the term “blind spot” our mind immediately goes to driving a car and what we can’t see in either our rear-view or side-view mirrors. What we cannot see is affected by our past driving experience, our vantage point or our location in the seat, the size/type of mirrors (tools to…
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Five Reasons for Doing a HMDA Scrub
With only a few months left before your March 1 filing, now is a good time to plan the year-end HMDA scrub. The point of a HMDA Scrub is to compare specific data in the loan application register (LAR) to loan origination source systems (LOS) or physical loan documents. There are several reasons why you…
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Analyzing “Not Provided” Race/Ethnicity in HMDA Data Before Submission
An old adage is that statistical analysis can only be as good as the data that goes into it. Garbage in, garbage out. In the realm of fair lending analysis, there is a dilemma that every analyst must deal with, namely, how to handle and analyze HMDA records where race and/or ethnicity are reported as…
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5 Ways HMDA Data Are Used in Fair Lending Analysis: Your analysis is only as good as the data
Fair lending analysis attempts to use lending transaction data to tell the story of the evenhandedness of underwriting, pricing, and marketing decisions in terms of what happened when, where, why, how, and to whom. Fair lending compliance managers may use HMDA data to quantify fair lending risk in several ways: Disparity Ratios. Comparing decision or…
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5 Ways to Use HMDA Data in a Non-Fair Lending Context
I have always been shocked by the reluctance of lenders to use HMDA data for reasons other than fair lending. Too often, mentioning the four letters, H M D A, causes heartburn among lenders. This is understandable because HMDA is associated with compliance, regulation, race, and lawsuits. HMDA data are a blessing to the mortgage…
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3 Reasons to Go Beyond the HMDA Edit Checks before submission
As the year 2021 winds down, it is time to start thinking about ensuring that your HMDA submission is ready to be filed by March 1, 2022. Before the end of this year Compliance Officers, and those ultimately responsible for the HMDA submission signoff, should use this time to make sure that the HMDA data…
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Approaches to Peer Analysis in LendingPatterns™
One of the great features of LendingPatterns™ is that any lender’s diverse lending performance can be analyzed in the context of other lenders in the same market. This is the only way a given lender’s performance can be said to be above or below expectations. Sometimes this is referred to as comparing a lender against…
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5 Fair Lending Myths Dispelled
After a long career in mortgage finance and fair lending I’ve attended many panels, workshops, and conferences on fair lending. All too frequently at these events, I hear someone from the audience or even a panelist declare a “fair lending myth.” A fair lending myth is a statement about HMDA, ECOA, and FH Act regulatory…
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Optimize Your HMDA Fair Lending Resources with 6 Key Factors
Optimize Your HMDA Fair Lending Resources with 6 Key Factors Lenders often face the questions, “What resources do I need to manage fair lending?” and “how much should I budget?” The truth is there is no standard answer to these questions regarding effective fair lending analysis. The human, technological, and monetary resources needed to handle…
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What’s the point of fair lending monitoring?
In my experience, there are more lenders who do little to nothing to monitor fair lending than those who actively manage it. Those that do less tend to be independent mortgage companies rather than depository institutions. I believe there are several reasons for this outcome: A) Culture and Traditions: Prior to Dodd-Frank independent mortgage companies…