On March 29, 2019, the Consumer Financial Protection Bureau (CFPB) released the Modified Loan Application Registers (LARs) reflecting 2018 mortgage lending activity reported under the Home Mortgage Disclosure Act (HMDA). These reports represent the first release of HMDA data under the new rule implemented in 2015. Starting in 2018, under the 2015 HMDA Rule, financial institutions were required to report new mortgage products (i.e., open-end lines of credit) and substantially more data elements (e.g., credit score, DTI, CLTV, interest rate, etc.) than in previous years.
While the Modified LARs are useful for analyzing mortgage activity for one institution, it offers limited benefits in benchmarking lender performance across markets and versus peers. In its press release, the CFPB stated that a complete loan level dataset representing all 2018 HMDA data would be published later this year.
While we await the availability of the complete loan level dataset, ADI has combined the Modified LARs of all 5,657 institutions as published on the CFPB’s website, into an aggregate loan level dataset. This dataset, consisting of 14,708,414 records, is a preliminary snapshot of all HMDA-reported activity for 2018. With these data we are able to benchmark our clients’ lending performance versus peers to support analyses of 2018 activity related to Fair Lending, Redlining, the Community Reinvestment Act, and HMDA.
As an example, in Figure 1 below we show the distribution of 2018 HMDA data by Action Taken type across all records and for selected subsets of data. We often use HMDA-reported data like this to provide useful context in understanding our clients’ Underwriting and Pricing decisions and how those decisions compare to other institutions. Now with the expanded data, we are able to account for new factors – such as DTI, CLTV and loan term – and explore new areas of risk, including prohibited basis groups (i.e., age), product terms (e.g., prepayment penalties, balloon payments, etc.) and pricing decisions (e.g., interest rate, discount points, loan costs, etc.).
Please contact us if you have any needs for leveraging the insights of this preliminary snapshot of 2018 HMDA data.