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Community Reinvestment Act

Why HMDA Data Needs to Change

Adam Rust's picture

Posted August 26, 2010

The Dodd-Frank bill will require lenders to disclose more data about their lending, but the fundamental problems with HMDA remain largely unresolved. Dodd-Frank says that it will collect, and then disseminate, the following new categories within an updated HMDA by no later than 2012:

  • age of borrower
  • borrower credit score
  • total points and fees payable at origination
  • the spread between the loan's interest rate and the corresponding treasury note of similar maturity
  • value of the collateral pledged against the loan
  • non-amortizing loan features
  • length before loan reset (months)

Those are some good ideas. I think that there is going to be a substantial discussion about

Fixing CRA: More Emphasis on Community Development

Adam Rust's picture

Posted August 25, 2010

One of the problems with the enforcement of the Community Reinvestment Act has been the inability of examiners to create standards that can distinguish the level of effort made by different banks and thrifts. The problem isn't just with the ratings, although they are certainly guilty of this sin. It lies in the construction of examinations, as well.

Community development loans are one of the most significant ways that a bank can extend credit that would otherwise not be available. Loans for

More CRA Grade Inflation at the OCC

Adam Rust's picture

Posted November 20, 2009

Minutes ago, the Office of the Comptroller of the Currency demonstrated once again why no one takes their CRA exams very seriously.

The OCC released evaluations for 27 banks.  All of the evaluations were made from October 15th through November 14th.  No banks were given any grades that would reflect shortcomings in service, lending, or investment to their local areas.  Twenty-five passed, and two passed with "outstanding" colors.

How good is an "outstanding?"  Well, the people who run your credit card are apparently doing an outstanding job at making you happy.  Citibank (South Dakota) NA received an outstanding.  Did they do an outstanding job? Sure, maybe they are charging millions of Americans up to 29.9 percent on their credit card debt, but they did it well, right?

Drilling down to Citibank's evaluation, it is easy to see some of the reasons for why the CRA needs to be

Miller-Moore: It Still Works

Adam Rust's picture

Posted October 16, 2009

Today's Miller-Moore amendment makes more sense than would first appear.  The new rule, coming out of the House Financial Services Committee, exempts most financial institutions from new regulatory review by the proposed CFPA.

Banks with assets under $10 billion, and credit unions with assets under $1.5 billion, would not be examined by the CFPA.  It seems like a cave-in, right?  What's up with the lobbyists giving up on so much work from those 8,000 clients? What's up with helping the country prevent another meltdown?

Advocates initially responded with some frustration.  The National Community Reinvestment Coalition published a

New Data on Mortgage Lending is Now Available

Adam Rust's picture

Posted October 2, 2009

The Federal Financial Institutions Examination Council (FFIEC) released the new Home Mortgage Disclosure Act records for 2008 this week.  The data, referred to as "HMDA data," covers 14.2 million mortgage loan applications and another 2.9 million mortgage loan purchases on the secondary market.  Want to see what I am talking about? You can download the data here.

The HMDA data is released to help citizens understand how banks and other lenders are working in their neighborhoods.  It was legislated through the Home Mortgage Disclosure Act, and it dovetails within the broader aims of the Community Reinvestment Act.

New legislation is on the table in DC that would counter the shortcomings of this data.  HMDA is broken. 

Will the CRA be able to Keep Up with Mobile Banking?

Adam Rust's picture

Posted July 29, 2009

Its a maxim that regulators can never quite catch up with the changes made by practitioners.  Mobile banking threatens to become the next example of that concept.  It very well could lead to undermine the Community Reinvestment Act (if unwittingly) unless some kind of regulatory fix occurs first.

The new Community Reinvestment Act Modernization bill (HR 1479) seeks to help that legislation catch up with the set of financial innovations that have occurred since the bill was last modified in 1993.  A lot has happened.  There is a lot of catching up to do.

That bill was drafted this spring.  Even now, though, it appears that the market is changing so fast that there could be a need for new amendments to the bill's language before it is heard by the House Financial Services committee in the fall.

Today, there is news out of Charlotte than Bank of America is going to close one out of every ten of


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