Credit unions approved home mortgages to every racial groups at a much higher rate than all of their competitors last year, according to new data compiled by the Federal Reserve under the Home Mortgage Disclosure Act, or HMDA.
The HMDA data has been a bone of contention for credit unions and other lenders, as well as community activists, all of whom use it to draw different conclusions.
The National Community Reinvestment Coalition (NCRC), which is suing NCUA over repeal of its CRA-like Community Action Plan, says the HMDA data shows that mainstream lenders, like credit unions continue to fall short in providing mortgage loans to minority borrowers. In fact the data shows that all lenders, including credit unions, deny mortgage loans to minority borrowers at a far higher rate. But the data also shows that credit unions continue to have far lower denial ratios than other mortgage lenders, including banks, S&Ls and mortgage companies.
The HMDA data showed credit unions with much lower denial ratios for white borrowers (6.3%); African-American borrowers (19.5%); Asians (9.1%); Hispanics (16.3%) and American Indians (14.3%), than banks, S&Ls and mortgage banks. The credit union average denial ratio for minority borrowers was 13.4%, virtually the same as last year's 13.5% ratio, but lower than for national banks (16.1%); bank holding companies (16.3%); commercial banks (15.6%); S&L's (19.2%) and mortgage companies (18.4%).
However, critics like the NCRC will continue to point out that the lower denial ratios for credit unions is based on the fact that credit unions are all affinity groups, making the denial ratio of minorities to white borrowers, 2.1-higher than other lenders-troubling.
The HMDA data, like all numerology, with all of its faults, is used to buttress many arguments. But certain aspects of the HMDA report serve to skew the numbers, which basically indicate trends. One of the factors is that more institutions are required to file the HMDA reports this year. Another is that the mortgage boom of the past two years has thrown many of the ratios out of whack. Look for groups like the NCRC to use it in the coming months to buttress its case to have CRA-the Community Reinvestment Act-applied to credit unions.
