Have you ever heard of the FFIEC?
That would be, drum roll please, The Federal Financial Institutions Examination Council
Now that sounds like a truly bureaucratic organization doesn't it?
They are an interagency body empowered to prescibe uniform principles, standards, and report forms for the federal examination of financial institutions by the Board of Governors of the Federal Reserve System, The FDIC, and others.I got that from their website. Pretty much anybody who's anybody. I've got to admit that I'll now sleep better knowing that they're on the job.
In their September release they made available HMDA data from over 14.2 million applications. That sounds like a pretty strong sample. Here's some of what they had to say.
FHA loans rose 169% in 2008 over 2007 levels-their market share went from 5.5% to 19.6%
VA loans increased 48% during the same time frame-their market share went from 1.5% to 2.9%
The HMDA data also draws some conclusions as to who is getting approved and denied and their ethnic backgrounds. I initially found the data interesting until I saw the following. That when drawing conclusions in regards to approval and denials the HMDA data did not take into consideration such "potential determinants" of credit worthiness and pricing as;
the borrowers credit history
debt to income ratio
loan to value ratio
Now I've been a lender well, forever, and I've always taken this information into consideration. It seems rather important to me. So when you see an article stating that more people of a certain race or background were turned down that others, just remember they're not evaluating why.
So,
What does HMDA information really tell us?
I'm not sure!
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