About the Home Mortgage Disclosure Act data

December 14, 2013

Home Loan Denial Rates - VA

By Ashley Apodaca

The data for this story was released through the federal Home Mortgage Disclosure Act, which requires most lending institutions to report home mortgage loan application information to the government annually.

HMDA was passed by Congress in 1975 and has undergone several changes since then. Today, reporting institutions must include information about the mortgage applications they receive such as the amount asked for, the location of the property being purchased, and the type and outcome of loan application. Lending institutions are also required to report certain demographics of the loan applicants, including race, gender and income.

According to “A Guide to Home Mortgage Disclosure Act Data” by Kathryn Pettit and Audrey Droesch of the Urban Institute, the act was established to assist in:

¶ Determining whether financial institutions are successfully meeting their communities’ housing needs

¶ Targeting community development funds in ways that attract private investment to areas most in need

¶ Identifying potentially discriminatory lending patterns

Instead of looking at the entire national HMDA dataset, we focused on Virginia and Maryland. We obtained and analyzed the 2012 and 2011 data for both states. Most of our analysis was done in Microsoft Access. We ran numerous cross-tabulations to calculate the loan denial rates for applicants from various ethnic and racial categories. Most of the cross-tabs required filtering the data by the applicants’ income — to ensure that we were comparing applicants of similar financial means.

Using this method, we were able to calculate the statewide loan approval and denial rates for each racial category in each income bracket. We then took it a step further by calculating the approval and denial rates in Richmond and Baltimore, again by race and income.

Lastly, for a historical comparison, we performed a similar analysis of the 2008 HMDA data for Virginia.

Here is a quick glimpse of the results of our analysis of the 2012 data. As you can see, African American and Latino applicants had much higher loan denial rates than white applicants in the same income group.

Home Loan Denial Rates - MD

 Main story: Racial gulf persists in who gets home loans