Home Mortgage Disclosure Act data shows big drop in lending activity, as U.S. application volume drops more than 13% in 2010; data continues to show minorities denied credit at greater rate than non-Hispanic white males

Michelle Rivera

CHARLOTTE, North Carolina , September 26, 2011 (press release) – Newly released 2010 HMDA (Home Mortgage Disclosure Act) data indicates a significant drop in lending activity, observes TruPoint Partners. Nationwide application volume was down over 13% and originations down 12% in 2010. The incidence of higher-priced loans was less than 4% of originations.

"Fair Lending and equal opportunity for credit is critical to this country's economy. And most institutions fully meet the credit needs of their communities, but accurately demonstrating this can be a challenge," stated Trey Sullivan, CEO of TruPoint Partners.

The 2010 data continues to show that minorities are denied credit at a greater rate than non-Hispanic white males (19.66% vs. 14.40%). "Though disparity exists, it is worth noting that the denial gap between minorities and white males decreased almost 5% in 2010," continued Sullivan. HMDA data does not currently include the key determinants of credit that provide a complete picture. In order to assist lenders with their fair lending review, TruPoint Partners makes a free fair lending comparison report available to each HMDA reporting institution.

Fair lending cases have historically fallen into two categories: price discrimination (charging minorities higher rates and fees) and denials (failing to provide credit to minority applicants). Examiners utilize HMDA data to determine exam parameters for individual institutions. Institutions that file HMDA should review their data in advance. Lending disparity is relatively common, but lenders can expect increased fair lending scrutiny when it is present.

"Lenders acknowledge that fair lending is an ethical imperative as well as a regulatory mandate," Sullivan continued. "Passing fair lending examinations are not optional. Negative outcomes can compromise reputation and impact growth. With the release of 2010 HMDA data, compliance officers are empowered to run comparisons on a national and local level. Application, origination, denial, and pricing analysis can be performed for each financial institution and compared to others within their peer group. We will continue to share our analysis with our clients and make new insights available via our compliance blog."

About TruPoint Partners: TruPoint Partners is an independent consulting and data analytics firm providing a variety of tools and services to financial institutions. TruPoint Partners serves over 500 community based institutions to help reduce cost, manage risk, and grow their businesses.

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