Article: “HMDA, Housing Segregation, and Racial Disparities in Mortgage Lending”

Article: Charles M. Lamb,”HMDA, Housing Segregation, and Racial Disparities in Mortgage Lending,” State University of New York at Buffalo (July 2015).

Housing segregation and discrimination remain tenacious problems in America. This Article first explores the passage of the Home Mortgage Disclosure Act (HMDA) of 1975 and its 1989 amendments in order to clarify their objectives and requirements for providing data to the public that potentially may be used to combat redlining and lending discrimination in the nation’s housing market. Given this background, this Article then relies on HMDA data to investigate the following question: Are racial minorities in America’s largest metropolitan statistical areas (MSAs) more likely to receive government-insured mortgages rather than conventional mortgages if they reside in more segregated metropolitan areas?

The analysis indicates that housing segregation has a significant negative effect on African Americans’ ability to receive conventional mortgages, thereby distinguishing them from Asians, Hispanics, and whites. If African Americans are unlikely to receive conventional mortgages in more segregated areas, this suggests that in the future, highly segregated MSAs are likely to remain segregated along black-white lines and that African Americans will continue to be the mast segregated racial group in the country. Based on this analysis, the Article concludes that HMDA should be amended to require additional data from commercial banks in order to determine the extent to which lending discrimination is occurring and thus perpetuating-and possibly even increasing-housing segregation in the United States. At minimum this data should include such basic information as applicants’ total financial assets, credit scores and history, number of dependents, value of the property to be purchased, and size of down payments required Banks routinely collect this data during the mortgage application process, so it should be relatively easy to include in their lending disclosure forms.