More and more, it seems like any changes to the Community Reinvestment Act that come out of a new CFPA will be limited to data collection requirements. That is a missed opportunity. Still, if updates to the CRA can repair the framework for data, that is still a plus.
Everyone knows that HMDA data could be better. It doesn't really offer a means to separate the prime loans from those that are subprime. There is one clue: since 2004, the data has included information about interest rates. Even that data is limited, though. It isn't sensitive to adjustable rates that reset. Moreover, the exotic loan terms that are the feature of so many subprime loans are also ignored. There is no indicator for a stated income product, or for a balloon, or for an unusual loan term. In general, if it isn't a practice that was characteristic of the mortgage market in 1985, then it isn't in HMDA.
This frustrates bankers and policy wonks alike. Bankers cringe when prime loans are indistinguishable from subprime.
I spoke with the head of the mortgage division at one of the larger banks in the country yesterday. I put the question to him. "If you could change one thing