Content area
Full text
Abstract
Since 1975, the Home Mortgage Disclosure Act (HMDA) has required most mortgage lending institutions to disclose to the public information about the home loans they originate or purchase during a calendar year. In using these data, however, researchers need to be aware of a number of issues and potential problems that characterize HMDA. This article provides a comprehensive enumeration of these issues, focusing on practical problems that can potentially influence choices researchers make in using the data or in interpreting the findings. The article also includes an illustrative example of how the data that is reported in HMDA can be used to gain a better understanding of trends and practices in the home mortgage market.
Since 1975, the Home Mortgage Disclosure Act (HMDA) has required most mortgage lending institutions with offices in metropolitan areas to disclose to the public information about the geographic location and other characteristics of the home loans tiiey originate or purchase during a calendar year. Disclosure of home lending activity is intended to help me public determine whether institutions are adequately serving the housing finance needs of tiieir local communities, to facilitate enforcement of the nation's fair lending laws, and to guide public- and private-sector investment activities. It is estimated that the more than 8,800 lenders currently covered by the law account for approximately 80% of all home lending nationwide. Because of its expansive coverage, the HMDA data likely provide a representative picture of most home lending in the United States. For a previous analysis of HMDA coverage, see Bercovec and Zorn (1996).
Over the years, the Congress has amended HMDA to extend the reach of the law to a broader range of institutions and to expand die types of information that must be reported and disclosed. The most sweeping legislative amendments occurred in 1989; these required the disclosure of application and loan-level information for home loans, including me disposition of applications and me income, sex, and race or ethnicity of the individuals applying for credit. Before that time, HMDA disclosures were limited to summary totals covering loan activity at the census tract level. Analysis of the loan-level information prompted widespread public discussion about the fairness of mortgage lending decisions; the disclosures revealed wide disparities in the rates of...