Mortgage Data Contradicts Claims of Lending Bias; Traiger & Hinckley LLP Study Shows African...

NEW YORK -- A Traiger & Hinckley LLP study of 2004 data from ten leading national mortgage lenders(a) shows no meaningful differences by race, ethnicity, or sex in the pricing of first lien home purchase loans with reported rate spreads. According to an analysis of more than 90,000 loans, African

These finding are derived from lender data prepared pursuant to the Home Mortgage Disclosure Act (HMDA). HMDA requires lenders to report the spread between a first mortgage's annual percentage rate (APR) and comparable U.S. Treasury security yield, if the spread is at least three points.

Purpose of Study

"So far, analyses of 2004 HMDA data have been largely limited to comparing the extent of loans with and without rate spreads for different borrower groups," stated named partner Warren Traiger. "The value of such analyses is hotly contested, since without information on borrower qualifications and loan characteristics, there is no way to assess the appropriateness of an APR. However, if, as some have alleged, minorities and women are being overcharged for loans, that disparity should carry over into loans with reported rate spreads."

The Traiger & Hinckley LLP study focused on mortgages made to homebuyers. The data includes large numbers of first-time homebuyers, a significant proportion of whom are minorities and single women. "What our research has shown," Traiger noted, "is that for home purchase loans with rate spreads, borrower race, ethnicity, and gender are irrelevant."

Conclusion

Although HMDA data can never conclusively prove or disprove discrimination, the Traiger & Hinckley LLP study suggests that with regard to home purchase loans with rate spreads, lenders are treating minority and women homebuyers fairly.

"Since borrowers with reported rate spreads are more likely to have deficient or non-traditional credit histories, they are particularly vulnerable to abuse by unscrupulous lenders," said Traiger. "If mortgage lenders are treating the most vulnerable borrowers fairly, it seems unlikely that they are otherwise engaged in illegal discrimination."

The complete study is available at www.traigerlaw.com.

About Traiger & Hinckley LLP

Traiger & Hinckley LLP is a New York City-based law firm that advises financial institutions on complying with federal and state anti-discrimination laws. The firm's analytical group employs statistical methods including linear and logistic regression analyses to evaluate loan data.

(a) ABN AMRO, Bank of America, Citigroup, Countrywide, GMAC, JPMorgan Chase, National City, PHH, Washington Mutual, and Wells Fargo.