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Banks Should Steel Themselves for Fair Lending Game-Changer

American Banker

Warren W. Traiger

Warren Traiger authored, "Banks Should Steel Themselves for Fair Lending Game-Changer" in American Banker on August 12, 2014.

The Consumer Financial Protection Bureau's proposal to increase the categories of mortgage data collected and reported under the Home Mortgage Disclosure Act is, in the words of Yogi Berra, déjà vu all over again.

At least, it's déjà vu for those of us who have followed the HMDA since 1991, when the first reported data on mortgage applications and originations by race, ethnicity and sex was made public. That raw data, which did not take into account the credit quality of the applicants or proposed collateral, showed that black and Hispanic home loan applicants were, respectively, 2.4 and 1.5 times more likely to be rejected than white applicants. The findings ignited a firestorm of accusations about mortgage lending discrimination by public officials and advocacy organizations. Those accusations, which seemed to catch the industry by surprise, spawned the fair lending mortgage litigation and regulatory enforcement actions that continue unabated to this day.

Originally printed in American Banker; reprinted with permission. 

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