USE EXPANDED HMDA DATA TO WIDEN LENDING POTENTIAL, BANKERS ADVISED

Lending opportunities, although possibly at an elevated credit risk, abound for banks wiling to use the Home Mortgage Disclosure Act's expanded 2004 data on high-cost mortgage borrowers to reach out to more households eager to own their homes, states the Office of the Comptroller of the Currency in

Issued before the Federal Reserve Bulletin published a Fed staff analysis in September of HMDA pricing information for higherpriced loans based on the applicants' gender, race, ethnicity, and income, the OCC publication urged banks to consider partnering with experienced, community-based housing counseling organizations to enhance the creditworthiness and financial savvy of households who might otherwise be ignored, be beyond reach or not meet the criteria for prime or even subprime financing.

These and other community-focused relationships may aid in identifying new and unexplored housing markets, and developing more products and services to accommodate identified needs, enabling more households to navigate the mortgage transaction process and prepare for homeownership, combating predatory lending practices, and reducing lender risk, said the newsletter.

Warning that the expanded HMDA data may be subject to misinterpretation, the newsletter called for banker awareness and close scrutiny of loan pricing disparities that could signal unlawful lending discrimination.