With more mortgage applications than ever being taken over the phone, Huntington Bancshares is asking the tough questions to ensure its mortgage lending data are accurate.
The Columbus, Ohio-based bank this spring decided to ask telephone applicants for their race and gender - a practice many banks shy away from for fear of offending their customers.
Before deciding to change its policy permanently, the bank conducted a three-week survey in the spring to gauge its customers' opinions. Norman Wilson, senior vice president in Huntington's community services division, said it found nearly all its customers were willing to give race and gender information over the phone.
Regulators like the practice, too, because the bank can provide more complete and accurate Home Mortgage Disclosure Act data.
"We want to have accurate information to provide better services to our customers," Mr. Wilson said. "The fact that the information is reported (to regulators) certainly plays into this, but mainly we want to have a clean and accurate data base to help our business."
Mr. Wilson said more than 25% of his bank's mortgage applications are taken over the phone. HMDA does not require bankers to note the race or gender of customers who do not apply in person.
Asking these questions does require extra caution from the loan officers, Mr. Wilson said. So Huntington has programmed into its computer system a script that pops up on the screen during applications for HMDA- related loans. These include first mortgages, refinancings, and home improvement loans.
Bankers tell applicants that they are not obligated to answer the questions, which are designed to help track the institution's record of lending to minorities. A banker will encourage an applicant to respond, but if that person refuses, the banker won't push the issue further.
Jo Ann S. Barefoot, a director with KPMG Barefoot Marrinan in Columbus, said a "tremendous upsurge" in telephone loan applications has made HMDA data collection more difficult.
In person, if a potential borrower refuses to provide such information, a banker can make a judgment and include it with the application. Over the phone or via computer, that's generally not possible.
"More and more people are moving from the branches to phone applications and personal computers," said Ms. Barefoot. "Because of that, it's becoming harder and harder to judge gender and race."
One Midwestern compliance officer, who didn't want to be identified, said making sure the data are accurate is "a major issue." He said his bank was considering how to address this because of the large number of applications it takes over the phone.
Consultants said many others are wrestling with the issue as well, weighing the benefits of more complete data against the risk of customers' lying or being offended.
Allen Fishbein, general counsel with the Washington-based Center for Community Change, said the government should require banks to ask for race and gender in all situations in order to make HMDA data more consistent from institution to institution. He said the growth in telephone and computer applications makes that necessary.
Accuracy is at a premium for Huntington now, with a Community Reinvestment Act examination approaching at the end of this month. It received a "satisfactory" rating in its last review.