What is the source of the data for the HMDAVision App?

  • The HMDA data is sourced from FFIEC and/or CFPB.
  • The latest HMDA data is for prior year, released in Q1 or Q2 of the current year.
  • Data is refreshed periodically following CFPB releases (for example, Monday refreshes).
  • HMDA data in 2017 covered 92% of all mortgages in the US.
  • Demographic data was sourced from FFIEC & US Census, American Community Survey.
  • HMDA Data for this analysis is based on retail/broker originations and does not include correspondent channel (purchased loans).
  • HMDA App has latest 5-year of HMDA data. For more years, please email us at info@polygonresearch.com
Are all mortgages included in HMDAVIsion?

  • Most home-secured loans are included in HMDA data, and therefore available through HMDAVision.
  • There are exceptions. For example, a home equity loan taken out for consolidation of credit-card debt or to pay for medical expenses is not covered by HMDA, unless some part of the loan proceeds are also intended for home improvement or home purchase purposes. Home equity lines of credit (HELOCs) may not be in the data even if intended for home improvement or home purchase because reporting HELOCs is optional. Additionally, not all mortgage lenders are HMDA reporters. For example, a lender does not have to report HMDA data unless it has an office in a metropolitan statistical area (MSA). As a result, reporting of home loans made in some rural areas may be relatively low.
  • Beginning in 2018, more loans will be covered by HMDA and more details about the transactions will be released to the public.

What's the difference between Purchased Loan and Purchaser Type?

  • Out of all the Action Types reported by financial institutions, only two result in loans coming onto the books of the lender: Originations and Purchased Loans.
  • Both of these can be sold to investors (GSEs, private securitizers, other lenders, etc.) or kept in portfolio. If sold - crucially, in the same calendar year as the loan was acquired (again, by origination or purchase) - a non-zero value is entered for Purchaser Type. If retained, the value 0 is shown for Purchaser Type, reflecting "not applicable". If sold in a year subsequent to that in which it was originally acquired, no report of this is made in HMDA data.
  • HMDAVision adds a custom Purchaser Type value - "Portfolio" - reflecting Originations or Purchased Loans which are not sold in the same year. This narrows down the Purchaser Type "N/A" values to the action types that do not result in loans (e.g. Denied).
  • The important consequence of this is that sold loans (Purchaser Type > 0) are higher than what is shown in HMDA data, and retained loans (Purchaser Type = 0, and Action Type of either Origination or Purchased Loan) are lower than what is shown - both due mostly to 4th quarter transactions which are sold to investors in the subsequent calendar year.
  • See https://www.consumerfinance.gov/policy-compliance/rulemaking/regulations/1003/Interp-4/#4-a-11-Interp-7 (Paragraph 4(a)(11)) for more detail.
What is the value of HMDA data and HMDAVision to compliance teams and regulators?

  • Though the HMDA data do not support definitive conclusions about unlawful discrimination, they are a useful screen, previously unavailable in the form of HMDAVision, to identify lenders, products, applicants, and geographic markets where differences among racial or other groups are sufficiently large to warrant further investigation.
  • Enforcement and supervisory agencies can use the HMDAVision insights to better target their resources.
  • HMDAVision insights can also be a valuable part of any mortgage lender's self-evaluation program.
How to Define Peers?

We have allowed maximum flexibility to define peers. Best practices for defining peers include using objective criteria to define your peers:Asset size
  • Type of institution (e.g. bank, credit union, non-bank lenders). For example, an independent mortgage banker, under HUD oversight, may be looking for peers that are also HUD regulated entities within each MSA.
  • Presence of a branch or a loan office in the relevant market.
  • Lenders that originate similar volumes of loans, using similar originations channels (in-person, or internet, etc) and are of the same type as the client.
  • Alternatively, peers can be further narrowed by lenders that are serving similar borrower segments, or that are deploying similar product strategy.
  • Should you need assistance identifying the peers, please email us at info@polygonresearch.com. We will respond within 2 hours
  • How do you calculate Applications and Originations
  • Applications are defined as all Action Types other than Purchased Loans. These include: Originated, Approved Not Accepted, Denied, Closed Incomplete, Preapproved Denied, and Preapproved Not Accepted.
  • Originations are defined as the Loans Originated in Retail/Broker channel (excludes Purchased Loans).

How may branch managers use HMDA?

  • Understand local demographic trends around the branch.
  • Understand local housing market trends around the branch.
  • Understand local and global competition.
  • Understand product trends in the neighborhood, county or city of the branch.
  • Understand loan production trends in the local markets served by the branch.
  • Benchmark against peers and competitors in the local market.
  • Identify lending opportunities – by exploring demand for mortgages at geographic segment, or borrower segment, or product segment.
  • Engage with the community and showcase how lender is serving the needs of the community
How may lender marketing and sales executives use HMDA?

  • Understand the whole story in the mortgage market – from demographic trends and housing market trends in target markets to mortgage production volumes and trends.
  • Understand local and global competition.
  • Understand product trends at the neighborhood, county, city or state level.
  • Understand loan production trends in the local markets served by the lender.
  • Benchmark against peers and competitors in the target market.
  • Identify lending opportunities – by geographic segment, by borrower segment, by product segment, and drive sales volumes through product innovation.
  • Upon request, PRI can assist marketing and sales executives with forecasts of loan production at any level – any geographic level, or any product or borrower segment level.
  • Engage with the community and showcase how lender is serving the needs of the community.
  • Have at their fingertips answers to questions by regulators and community activist groups about lending practices and outcomes
Why do I see NA or Information not provided?

You will see this in the data when the applicant is not a natural person (a business, corporation or partnership, for example) or when the applicant information is unavailable because the loan has been purchased by a lender.
What are HPLs?

HPLs are the Higher-Priced Loans

The price data take the form of a "rate spread." Lenders must report the spread between the annual percentage rate (APR) on a loan and the rate on Treasury securities of comparable maturity – but only for loans with spreads above designated thresholds. So rate spreads are reported for some, but not all, reported home loans.

The APR represents the cost of credit to the consumer. It captures not just the contract-based interest rate on a loan, but also the points and fees that a consumer pays and other finance charges such as premiums for private mortgage insurance. Lenders must calculate and disclose the APR to consumers under a separate law, the Truth in Lending Act.

Lenders also report price information in the form of a "flag" indicating whether a loan exceeds the price triggers of the Home Ownership and Equity Protection Act (HOEPA). Those triggers are substantially higher than the thresholds for reporting rate spreads. (https://www.federalreserve.gov/newsevents/pressrel...)
What if my HMDA data indicate that my lending firm charge, minorities, for example, more for loans than whites on average? Can my firm be charged with unlawful discrimination?

HMDA data alone cannot be a proof for unlawful discrimination. However, such a disparity may indicate a need for closer scrutiny. Supervisory and enforcement agencies investigating disparities typically collect additional information about factors that may determine loan prices from lenders' loan files or other sources. Without information about relevant price determinants, one cannot draw definitive conclusions about whether particular lenders discriminate unlawfully or take unfair advantage of consumers. HMDA data include some potentially relevant determinants of price, such as lien status, but exclude many other potential determinants, such as borrower credit history, borrower debt-to-income ratio, and the ratio of the loan amount to the value of the property securing the loan (loan-to-value ratio). Therefore, price disparities by race, ethnicity, or sex disclosed in HMDA data will not alone prove unlawful discrimination. (https://www.federalreserve.gov/newsevents/pressreleases/files/bcreg20060403a1.pdf )
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