MBA Disputes ‘Deeply Flawed’ Reveal News Analysis on Mortgage Lending
The Mortgage Bankers Association issued a statement in response to an analysis by Reveal News on mortgage lending practices, calling the analysis “deeply flawed” and a “disservice” to the debate over fair lending practices.
The Reveal study, released Feb. 15 but disclosed in advance earlier to the Associated Press, said its analysis of Home Mortgage Disclosure Act data showed African-Americans and Latinos continue to be routinely denied conventional mortgage loans at rates far higher than their white counterparts.
MBA has long-held that HMDA data do not provide a complete picture of the criteria lenders use in making lending decisions. MBA Chief Economist Mike Fratantoni told the AP the records analyzed by Reveal do “not include sufficient data to make a determination regarding fair lending.”
The MBA statement appears below:
“There is no place in our society for discriminatory lending practices and MBA and its members continue to support policies that ensure fair and equal access to mortgage credit regardless of race or ethnicity.
“The story released today by Reveal News is deeply flawed and does a disservice to the important issues of access to credit and fair lending. Most importantly, Reveal fails to take into consideration several key components that form the backbone of lending decisions: a borrower’s credit history, debt-to-income (DTI) ratio and loan-to-value (LTV) ratio. These are the most important components lenders consider when underwriting a loan. The Federal Reserve and other regulators have been clear in saying that denial disparities in the HMDA data are not in themselves determinative with respect to assessing fair lending. Fair lending examinations include a much richer set of information regarding loans and borrowers.
“While Reveal acknowledges these factors were not included in their analysis, it suggests it is because banks won’t disclose this information. The fact is that federal privacy laws explicitly prevent banks from doing so. It is important to know, however, that federal regulators do have access to all necessary information when reviewing discriminatory lending patterns.
“MBA shared its concerns about this flawed approach with the authors and editors in advance of the publishing of this story, but our facts fell upon deaf ears.
“The authors also made the curious decision to limit their analysis to only ‘conventional’ loans, specifically excluding mortgages guaranteed by the Federal Housing Administration (FHA). The FHA program is designed specifically to help borrowers with lower credit scores and small down payments. By excluding FHA loans from its analysis, the authors purposefully ignored a sizeable share of the home lending market that provides homeownership opportunities for lower-income and traditionally underserved borrowers.
“The issue of fair lending is an important one, and MBA has and will continue to advocate for policies that responsibly promote expanding the credit box in order to serve borrowers of all demographics and income levels. Unfortunately, this story does little to contribute to a productive dialogue.”
