Greenspan: HMDA Data Can't Prove Bias

Federal Reserve Board Chairman Alan Greenspan says the new Home Mortgage Disclosure Act data will aid enforcement of fair-lending laws, but that additional loan-level information is necessary to prove discriminatory practices."We recognize that such conclusions require far more detailed evaluations than is possible using HMDA alone," the Fed chairman told the Independent Community Bankers at their annual convention. Lenders are very concerned that the new loan pricing data that will be released with the HMDA data this year are going to lead community groups and the media to conclude that some lenders are unfairly targeting low-income and minority neighborhoods with high-cost subprime loans. The Fed chairman and lenders' groups are warning that the HMDA data are still limited and do not take into account credit scores, downpayments, the borrower's assets, and other factors that lenders consider in pricing a loan. "The pricing data will assist as a screening tool to facilitate self-monitoring and enforcement activities," Mr. Greenspan said. "If screening suggests that there might be a fairness issue, additional information will need to be collected from banks' files or other sources."