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ALEXANDRIA, Va. – NCUA, along with the Department of Housing and Urban Development (HUD), the Federal Reserve Board, Federal Deposit Insurance Corp., and Office of the Comptroller of the Currency, Office of Thrift Supervisions, has posted a set of “Answers to Frequently Asked Questions” that address the new home loan price data disclosed earlier this year for the first time under the Home Mortgage Disclosure Act (HMDA). The release coincides with the data that lenders must make their HMDA data available to the public on request. NCUA said the FAQs will assist users of the data with their evaluation and interpretation of the data. Enacted by Congress in 1975, HMDA requires most mortgage lenders located in metropolitan areas, to collect data about their housing-related lending activity, report the data annually to the government, and make the data publicly available. HMDA initially required reporting of the geographic location of originated and purchase home loans. In 1989, Congress expanded HMDA data to include information about denied home loan applications, and the race, sex, and income of applicants and borrowers. In 2002, the Federal Reserve Board amended the HMDA regulations to require lenders to report price data for certain higher-priced home mortgage loans, and other new data. The new loan price data are intended to advance enforcement of consumer protection and anti-discrimination law and improve mortgage market efficiency. Also, lenders, community groups, government agencies, and others can use the data to identify opportunities for private or public investments. According to NCUA, the FAQs are part of a larger effort by the federal agencies to promote the informed used of the 2004 data. “A full understanding of the data, including its limitations, will help ensure that the data are used effectively to advance the goals of HMDA,” NCUA stated. The agency cited, by example, that the data do not include certain determinants of credit risk that could explain higher loan prices, such as the borrower’s credit history, loan-to-property-value ratio, and consumer debt-to-income ratio. “Consequently, the HMDA data are not, by themselves, a basis for definitive conclusions regarding whether a lender discriminates unlawfully against particular borrowers or takes unfair advantage of them,” the agency continued. The five federal agencies also intend to participate in educational outreach to sate and local agencies, trade associations, and consumer and community-based organizations. In addition to answering basic questions about HMDA such as what its purposes are, what are HMDA data and whether all home mortgage loans are covered by HMDA, the FAQs also address HMDA-related questions such as what are the new price data, which loans are deemed “higher-priced” and will have their priced reported, why is the requirement to report price data limited to higher-priced loans, and will all higher-priced mortgage loans be reported. In addition, concerning year-to-year comparisons of HMDA data, the FAQ answers three questions: how has the reporting of borrower ethnicity and race under HMDA changed? How will changed in OMB’s standards for defining metropolitan and micropolitan statistical areas affect comparison of 2004 HMDA data with previous years’ data? How will the transition rules affect 2004 HMDA data? The FAQs are posted on NCUA’s Web site at http://www.ncua.gov/news/press_releases/2005/NR05-0331.pdf. -

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