On the eve of the release of the 2004 Home Mortgage Disclosure Act data, lenders are preparing for an onslaught of inquiries from the press, regulators, federal investigators, and class action attorneys to explain any racial disparities in their pricing of subprime loans.The 2004 HMDA data includes subprime pricing data for the first time, coupled with the race, ethnicity, and sex of the borrowers, along with geographic location. Lenders should have a good understanding of their own HMDA data, but they won't know how they stack up against competitors until federal regulators release their annual summary of the HMDA data, possibly as soon as Sept. 12. "Where you stand relative to other organizations is really going to be the best indicator of what your risk is with respect to enforcement, examination, and litigation," Skadden, Arps attorney Andrew Sandler told a Mortgage Bankers Association compliance conference. The Department of Justice, the Federal Trade Commission, and the Department of Housing and Urban Development, along with the banking regulators, will be analyzing the HMDA data to identity lenders with the worst disparities. "I would suspect that three, five, or seven lenders will have letters from the Justice Department some time in the next several weeks," Mr. Sandler said.

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