Preliminary 1993 HMDA data shows that last year's boom in lending didn't change the underlying patterns of apparent discrimination in the industry.
Despite sharp rises in the number of loans given to blacks and Hispanics, those two groups still were roughly twice as likely to see their loan application rejected as was the case for whites and Asians.
The reports also showed that income levels made a huge difference in a person's chances of getting rejected, virtually regardless of ethnic and racial group. Still, an black had to make at least 20% more than the median pay in an area before seeing his or her rejection rate fall below that of a white earning less than 80% of the median wage. (See chart below.)
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"I'm not surprised at the HMDA data," said Timothy D. Marrinan, executive vice president and general counsel, Barefoot, Marrinan & Associates Inc., a consulting firm that specializes in compliance for financial institutions. "The focus on percentages can be a bit misleading.
"If we looked at the absolute number of applications," Marrinan said. "I think we would seem anymore people are qualifying. The absolute number is greater even though these percentages may be negative for a time."
Marrinan also said that, from another point of view, the attention on HMDA numbers has been beneficial because it has prompted financial institutions to pay more attention to those areas. "There's been more attention paid to marketing aggressively to those segments of the population," he said. "As a result there's been more demand and applications from minority applicants."
The data show 44.3% more blacks received loans and 46% more low- to moderate-income borrowers (people earning less than 80% of the median income in their metropolitan statistical area) received loans from those in 1992. The data were compiled by the Federal Reserve and reported July 28 by the Federal Financial Institutions Examination Council.
About 34% of all black applicants were denied loans while only 15.4% of white applicants were denied. In comparison, 21.5% of those who were from low- to moderate-income category regardless of race or ethnic group, were denied loans. The report shows a compilation of individual disclosure statements, from the more than 9,600 lenders covered by HMDA.
Lenders subject to HMDA received 13.5 million home loan applications in 1993, up from 10 million in 1992, and purchased roughly 1.8 million loans, down from nearly 2 billion in 1992.
According to FFIEC, the report is subject to revisions because institutions have 30 days for reviewing their disclosure statement and report to their supervisory agency any significant discrepancies they find between the data submitted and the data reflected on the statement.
After making corrections, FFIEC will compile the data for all lender's in each metropolitan area. It will send a hard copy of aggregate reports and individual statements to a central depository in each metropolitan area for public inspection. This is expected to be available by mid-October.
The HMDA reports cover home purchase and home improvement loans. They contain information about loan originations, loan purchases and applications that did not result in a loan. They also give information about three characteristics of applicants or borrowers: gender, race or national origin and annual income.
FFIEC prepared the HMDA statement for individual institutions on behalf of its member agencies--Comptroller of the Currency, Federal Deposit Insurance Corporation, Office of Thrift Supervision, National Credit Union Administration, Federal Reserve System and Department of Housing and Urban Development.
