Mortgage Applications with Missing Race Data and the Implications for Monitoring Fair Lending Compliance

Jason Dietrich

Journal of Housing Research, 2002, vol. 13, issue 1, 51-84

Abstract: High percentages of mortgage applications reported under the Home Mortgage Disclosure Act (HMDA) are missing race data, and those percentages are increasing. HMDA data are integral to monitoring bank compliance with fair lending laws, and regulators must understand the reasons for and consequences of the patterns of missing data. This study examines trends in missing race data from 1993 to 2000, discusses possible reasons for findings, and summarizes salient regulatory issues.Results indicate that race data are missing for systematic reasons. Therefore, sample selection problems may be a concern in fair lending examinations. Loan applications containing race data have higher origination rates than applications without race data. Applications from Asians and Hispanics appear more likely to be missing race data than applications from whites. These findings suggest that the denial odds ratio statistics and statistically modeled estimates of racial effects, both used in fair lending examinations, may be biased.

Date: 2002
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DOI: 10.1080/2167034X.2002.12461351

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