Board of Governors of the Federal Reserve System
Department of Housing and Urban Development
Federal Deposit Insurance Corporation
National Credit Union Administration
Office of the Comptroller of the Currency
Office of Thrift Supervision
Agencies Announce Updated Answers to Frequently Asked
Questions About HMDA Price Data
The federal bank, credit
union, and thrift supervisory agencies, along with the Department of Housing
and Urban Development (HUD), today
released updated "Answers to Frequently Asked Questions" (FAQs)
to aid interpretation of the 2005 home loan data to be disclosed this
year under the Home Mortgage Disclosure Act (HMDA).
For the second year in a row, the data will include price information on
loans priced above reporting thresholds set by the Federal Reserve Board
regulation that implements HMDA, Regulation C. As of March 31, lenders started
making these data available to the public upon request in the form of a
Loan Application Register, after removing certain information to protect
the privacy of applicants and borrowers. Summary statistical reports for
each lender and an aggregate report for each Metropolitan Statistical Area
will be released in September by the Federal Financial Institutions Examination
Preliminary indications are that
the data will show that the proportion of mortgage loans with prices above
the HMDA price reporting thresholds
increased from 2004 to 2005. The updated FAQs, in newly added Question
27, explain that an increase is expected because of changes in the interest
rate environment from 2004 to 2005 – specifically, the narrowing of
the difference between short-term interest rates and long-term interest
rates (sometimes referred to as a "flattening of the yield curve").
Changes in other factors, such as the business practices of lenders or
the risk profiles or borrowing practices of borrowers, also could have affected
the proportion of loans reported as higher-priced loans.
The updated FAQs will be posted
on each of the agencies' websites
and on the web site of the FFIEC, www.ffiec.gov/hmda.
HMDA, which was enacted by Congress in 1975, 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 in a modified Loan Application Register.
Initially, HMDA required reporting of the geographic location of originated
and purchased 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.