Shedding Some Light on Lending: The Effect of Expanded Disclosure Laws on Home Mortgage Marketing, Lending and Discrimination in the New York Metropolitan Area

The amended Home Mortgage Disclosure Act (HMDA), updated in 1991, required lenders to disclose information regarding the number of applications received, the race and income of applicants, the location of the property for which the loan was sought, and the disposition of each application. This article studies the expanded HMDA\u27s impact on conventional home mortgage lending in the New York City metropolitan area from 1991 until 1998. The author first examines ways to determine whether the disclosure of expanded HDMA data in 1991 influenced private lenders allocation of credit in the New York City metropolitan area. The release of data focused attention on lending in subject communities led to changes in the regulatory environment and in lenders\u27 attitudes, leading the author to conclude that while the study cannot prove that the disclosure of expanded data directly resulted in an increase in the market share of applications in subject communities, the increases are consistent with the conclusion and the HDMA had a measurable impact. The article examines increases in the denial rate ratio for three subject communities and concludes that high denial ratios in African American, Latino, and predominantly minority neighborhoods are consistent with discrimination, if not sufficient to prove it. Finally, it looks at the apparent inconsistencies of these two conclusions and argues that lenders\u27 allocation of more credit to subject communities is not inconsistent with discrimination against them, because lending changes were more directly correlated with marketing than differential treatment