Home mortgage lending by applicant race: Do HMDA figures provide a distorted picture?

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Abstract
The Home Mortgage Disclosure Act of 1975 (HMDA) was designed to further fair access to mortgage credit and requires lenders to report such information as location, loan amount, income, and race and sex for each application. However, race is missing in a significant proportion of applications taken by mail or phone. Given the widespread use of HMDA data by lenders, community groups, researchers, and regulators and the importance of mortgage lending as a public policy issue, the strengths and shortcomings of these data must be clearly understood. The main findings are that reported approval rates by race are significantly overstated for refinance and home improvement loans, while home purchase loans are little affected. A review of trends in how race is reported and in the technology of mortgage lending indicates that missing data on race will become a bigger and bigger problem in the near future.

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