Advocates Call on Fed to Put a Stop to Discriminatory Lending

Community Coalition Calls for Increased Transparency in Mortgage Lending

SAN FRANCISCO, Sept. 15 /PRNewswire-USNewswire/ -- A coalition of community groups called on the Federal Reserve Board to overhaul a 35-year old law that requires lenders to report vital information on their mortgage lending practices. At a Federal Reserve Board hearing held today in Chicago, advocates urged the Fed to increase the scope of information mortgage lenders must report and to use the data to crack down on lenders that engage in the sorts of discriminatory and abusive lending practices that led to the current foreclosure crisis and financial meltdown.

The advocates, representing groups from around the country, called on the Federal Reserve to make sweeping changes to improve the federal Home Mortgage Disclosure Act, a landmark law passed in 1975 to identify lenders engaged in mortgage redlining. HMDA data have been used to document systemic problems in mortgage lending, such as the discriminatory denial of loans based on race, and in more recent years the overwhelming concentration of high-cost, subprime loans in communities of color.

"Home mortgage lending data have proven an indispensable tool for identifying redlining and predatory mortgage lending," said Geoff Smith of Woodstock Institute, who testified at today's hearing. "The Board must now revise reporting requirements to keep pace with the dramatic

changes in the mortgage lending market since the law was last updated."

"The recently-enacted federal regulatory reform law includes important improvements to the Home Mortgage Disclosure Act," said Jim Campen of the Massachusetts Affordable Housing Alliance, who also presented testimony at the hearing. "But the new law misses key underwriting criteria and does not require public disclosure of all of the new data."

The advocates called on the Federal Reserve to:

• Require lenders to publicly disclose underwriting information relevant to loan pricing and approvals.
• Link information on loan defaults and modifications to mortgage lending data, to flag abusive and discriminatory lending and foreclosure patterns.
• Vigorously enforce the Home Mortgage Disclosure Act and fair lending laws. In recent years, notwithstanding their obligation to enforce these laws, the Fed and other agencies have failed to crack down on lenders that violate HMDA's reporting requirements, or even adequately investigate lenders that report HMDA data suggesting fair lending violations.

For information and detailed comments on the proposed revisions to HMDA, please contact:

Charles Bromley, Ohio Fair Lending Coalition (216) 410-3879

Tom Callahan, Massachusetts Affordable Housing Alliance (617) 822-9100

Alexis Iwanisziw, NEDAP (212) 680-5100 x201

Kevin Stein or Liana Molina, California Reinvestment Coalition (415) 864-3980

Adam Rust, Community Reinvestment Association of North Carolina (919) 667-1557 x31

Geoff Smith, Woodstock Institute (312) 368-0310 x2027

Barbara van Kerkhove, Empire Justice Center (585) 295-5815

For the last four years, the above groups have issued an annual report using Home Mortgage Disclosure Act data to document mortgage lending trends in seven cities around the country.

The latest report, "Paying More for the American Dream IV: The Decline of Prime Mortgage Lending in Communities of Color," documents the disproportionate decrease in prime mortgage lending in communities of color compared to predominately white neighborhoods, between 2006 and 2008.

SOURCE California Reinvestment Coalition