The single best tool we have for assessing access to home mortgage credit is in danger. One in every four home loan records now has no borrower demographic data attached to it.<\/p>\n
For policymakers, researchers, and civil rights enforcers, this means that it is difficult to know for sure if the things you think you see in the data are truly there.<\/p>\n
The share of home purchase loans going to Black and Hispanic borrowers since 2020 has risen slightly, as noted in NCRC\u2019s\u00a0preliminary analysis of 2021 Home Mortgage Disclosure Act data<\/a>\u00a0(HMDA). But due to the increase in the share of loans lacking demographic data it is difficult to understand if these gains are real, or if the declining quality of the dataset is creating a false impression of progress.<\/p>\n In 2020<\/a>, as White and Asian borrowers surged into the market to take advantage of low interest rates to refinance their homes, the share of loan applications[1]<\/sup><\/a><\/p>\n \u00a0with a Black or Hispanic applicant fell sharply. In 2021 those losses were generally reversed. Since 2018 Black and Hispanic applicants have seen only marginal changes in their share of the housing market and remain severely underserved by the mortgage industry when compared to their population size.<\/p>\n However, there has simultaneously been an upward creep in loan records reported without demographic information. This rising share of \u201cNo Data\u201d loans since 2018 may be creating a false impression. Loans initiated online\u00a0do not require the lender to submit demographic information<\/a>\u00a0unless the applicant offers it. Lenders are allowed to delete ethnicity, race, sex, age, and income data information on loan records that they purchase from other institutions, such as correspondent mortgage lenders. If correspondent or online mortgage lending favors specific racial groups, HMDA data would not necessarily reflect such a skew. These \u201cNo Data\u201d loan records could make it appear that underserved groups are doing better when in fact they may not be.<\/p>\n This is no mere blemish or scuff in our national records. Some 5.2 million loan records lack demographic information in the newest 2021 HMDA dataset. That is 23% of the entire dataset.\u00a0The demographic\u00a0blindspot\u00a0in HMDA now obscures nearly one in every four loan records nationwide.\u00a0<\/strong>Nor is this lack of data a merely academic concern: HMDA is a critical dataset, underpinning a broad array of housing policy and legislative efforts.<\/p>\n This is also not the first time the issue of missing data has been flagged as a problem. As far back as 2001\u00a0Jason Dietrich<\/a>, the current\u00a0Chief of the CFPB\u2019s Compliance Analytics and Policy<\/a>\u00a0team, wrote while at the OCC that missing demographic data in HMDA was \u201c…correlated with income, loan amount, and action taken on the loan.\u201d<\/p>\n \u201cGiven these concerns, what can be done? Above all, regulators must recognize and address the problem.\u201d – Jason Dietrich OCC 2001<\/em><\/p><\/blockquote>\n A more detailed statistical analysis is required, but we can explore the descriptive data and notice interesting trends.<\/p>\n