Advocates Call on Fed to Modernize Home Mortgage Disclosure Rules

A coalition of community groups called on the ""Federal Reserve"":http://www.federalreserve.com to overhaul a 35-year old law that requires lenders to report vital information on their mortgage lending practices.
[IMAGE] At a Federal Reserve Board hearing held last week in Chicago, advocates urged the Fed to increase the scope of information mortgage lenders must report and to use the data to crack down on lenders that engage in the sorts of discriminatory and abusive lending practices that led to the current foreclosure crisis and financial meltdown.

The advocates, representing groups from around the country, called on the Federal Reserve to make sweeping changes to improve the federal Home Mortgage Disclosure Act (HMDA), a landmark law passed in 1975 to identify lenders engaged in mortgage redlining.

HMDA data have been used to document systemic problems in mortgage lending, such as the discriminatory denial of loans based on race, and in more recent years the overwhelming concentration of high-cost, subprime loans in communities of color.

""Home mortgage lending data have proven an indispensable tool for identifying redlining and predatory mortgage lending,"" said Geoff Smith of ""Woodstock Institute"":http://www.woodstockinst.org/, who testified at the hearing. ""The board must now revise reporting requirements to keep pace with the dramatic changes in the mortgage lending market since the law was last updated.""

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""The recently-enacted federal regulatory reform law includes important improvements to the Home Mortgage Disclosure Act,"" said Jim Campen of the ""Massachusetts Affordable Housing Alliance"":http://www.mahahome.org/index.html, who also presented testimony at the hearing. ""But the new law misses key underwriting criteria and does not require public disclosure of all of the new data.""

The coalition urged the Federal Reserve to require lenders to publicly disclose underwriting information related to loan pricing and approvals, as well as link information on loan defaults and modifications to mortgage lending data in order to flag abusive and discriminatory lending within foreclosure patterns.

The groups also want the Fed to do a better job of enforcing HMDA and fair lending laws. They say in recent years, despite their obligation to impose these laws, the Federal Reserve and other agencies have failed to crack down on lenders that violate HMDA's reporting requirements, or even adequately investigate lenders that report HMDA data suggesting fair lending violations.

In addition to Woodstock Institute and the Massachusetts Affordable Housing Alliance, the alliance of advocates include the Ohio Fair Lending Coalition, ""NEDAP"":http://www.nedap.org - New York's Community Economic Justice Resource Center, the ""California Reinvestment Coalition"":http://www.calreinvest.org/, the ""Community Reinvestment Association of North Carolina"":http://www.cra-nc.org/, and ""Empire Justice Center"":http://www.empirejustice.org/.

For the last four years, these groups have issued an annual report jointly using Home Mortgage Disclosure Act data to document mortgage lending trends in seven cities around the country.

The latest report, ""_Paying More for the American Dream IV: The Decline of Prime Mortgage Lending in Communities of Color_"":http://www.nedap.org/resources/documents/PayingMoreIV_Final.pdf, documents the disproportionate decrease in prime mortgage lending in communities of color compared to predominately white neighborhoods between 2006 and 2008.