A Guide to Home Mortgage Disclosure Act Data

A Guide to Home Mortgage Disclosure Act Data 1 A Guide to Home Mortgage Disclosure Act Data December 2008 Kathryn L.S. Pettit and Audrey E. Droesch The Urban Institute The authors thank the Fannie Mae Foundation for funding this guide, which is updated from the original August 2005 version to describe the changes in the data for 2004 and later. The opinions expressed in this publication are those of the author(s) and do not necessarily represent the views of the editors, KnowledgePlex, Inc. or its officers or directors. The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders. A Guide to Home Mortgage Disclosure Act Data 2 A Guide to Home Mortgage Disclosure Act Data Kathryn L.S. Pettit and Audrey E. Droesch The Urban Institute Abstract The Home Mortgage Disclosure Act (HMDA) requires most lending institutions to report on home mortgage loan applications, including the application outcome, loan- and applicant-related information, and property location. Annual data collected through HMDA provide a unique set of annually updated files with information at the neighborhood level. This guide provides an introduction to the HMDA data and describes the HMDA indicators available on DataPlace. It also describes the contents of the original source files from which the DataPlace indicators were derived. Finally, the guide illustrates how DataPlace indicators derived from HMDA data can be used to shed light on such issues as neighborhood investment trends, changes in the racial and economic composition of home buyers, disparities in home loan access, and subprime lending. About This Report Sponsored by the Fannie Mae Foundation in partnership with the National Neighborhood Indicators Partnership, this publication is one of a series of companion guidebooks to DataPlace™, a Web site providing neighborhood-level data and learning materials to support well-informed policy and programs in the housing and community development fields. This guidebook edition updates the first edition published in 2005. Acknowledgments The authors thank the Fannie Mae Foundation for the opportunity to write this guide and expand the informed use of the Home Mortgage Disclosure Act data. We also greatly appreciate the assistance of Patrick Simmons of Fannie Mae and G. Thomas Kingsley of The Urban Institute in shaping the content and organization of this guide. Two National Neighborhood Indicators partners, Matthew Hamilton of the Piton Foundation and Lisa Nelson of Case Western University provided comments and suggestions at the time of the original edition from their local perspectives. Finally, we are grateful for the editorial contributions of Jennifer Kerslake and Elizabeth Miranda of the Fannie Mae Foundation, and Tim Ware of The Urban Institute. A Guide to Home Mortgage Disclosure Act Data 3CONTENTS INTRODUCTION .......................................................................................................................... 4 SECTION I. INTRODUCTION TO HMDA AND ITS DATA .......................................................... 4 Purpose of HMDA legislation ............................................................................................ 4 Who reports under HMDA? ............................................................................................... 5 HMDA data limitations....................................................................................................... 6 Which HMDA data are available on DataPlace?............................................................... 6 How to access HMDA source files .................................................................................... 8 Related Files: Subprime and manufactured home lender list............................................ 9 Related files: HUD Area Median Family Income ............................................................. 10 SECTION II: CONTENTS OF THE HMDA SOURCE FILES...................................................... 11 Transmittal Sheet (TS) .................................................................................................... 11 Loan Application Register (LAR) ..................................................................................... 11 SECTION III. USING HMDA TO UNDERSTAND COMMUNITY CONDITIONS ........................ 14 Assessing neighborhood housing investment ................................................................. 14 Measuring change in the racial/economic composition of home buyers ......................... 19 Analyzing differences in access to home purchase credit by income and race .............. 23 Examining Subprime Lending Patterns ........................................................................... 28 A Guide to Home Mortg