Year: 1993
Type: report
Abstract: Increased reporting requirements imposed by amendments to the Home Mortgage Disclosure Act (HMDA) have provided an unprecedented opportunity to compare lending patterns across markets and lenders.Most of the initial work released using data for the first amended HMDA reporting year (1990) has focused on market-level racial differences in denial rates for home mortgages.This study examines a different aspect: how and why individual institutions vary in their propensity to attract minority applicants and to approve applications from those customers.In a 1992 paper, the authors studied differences among individual lenders in the rates at which they originate minority and low-income loans, concluding that most of the variation can be attributed to differences in application rates rather than to differences in treatment.Here, the authors extend the previous analysis to examine the relationship between various measures of lender-market and financial performance and minority loan originations.The investigation includes all housing credit loans--home purchase, refinancings, and home improvement loans--but is limited to minorities.The authors first determine each lender's propensities to attract minority customers and to approve them for credit, and then conduct regressions to examine whether various measures of lender performance and structure can explain cross-lender variation in lending patterns.Remarkably little consistency is found in any of the residual patterns or across loan types, and lender structure and performance explain hardly any of the variations in minority loan applications or dispositions.The analysis reveals differences among lenders in their housing market activities, but the authors emphasize that the HMDA data do not contain enough relevant information about the loan applicants to draw any firm conclusions about the reasons behind the observed differences.
Source: Working paper
Institutions: Cornell University, Federal Reserve Bank of Cleveland
Language: English
Topic: Housing Market and Economics
Subfield: Economics and Econometrics
Domain: Social Sciences
SDG: Reduced inequalities
Open Access status: bronze
OpenAlex ID: W1585136641