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HMDA: Do you have skeletons in the closet?

Staying ahead: How to get on top of unintentional discrimination and serve the low-to-moderate income community without taking on more risk.

While there is not new legislation in place at this moment, it is plausible that changes in leadership could lead to changes that will affect lenders. 

According to an article published by Americanbanker.com, “The election of President Biden and turnover in leadership of the federal banking agencies not only means a new regulatory approach to implementing the Community Reinvestment Act. It could shine a brighter light on Congress potentially expanding the law to non-banks... it is feasible that Biden and his Democratic allies in Congress may pursue some kind of legislative package focused on addressing racial inequities, and that the inclusion of CRA-like obligations for nonbank financial companies could be folded in alongside other initiatives. ” 

Whatever lawmakers decide to do, your HMDA data is easily accessible to the public. In the past 8 months, it's been very clear in the data that loans getting closed are disproportionally higher income and higher credit score compared to a normal market. It's likely regulators are going to have a hay-day when a new year's HMDA data is made available.  

Most of the time what looks like discrimination is actually unintentional. Sure there are bad actors, but the real problem is that your average retail mortgage operation relies on getting business from referral partners, like builders and real estate agents. Lenders aren't avoiding low income areas, their referral partners just don't have a big presence or market-share in all areas of their community. 

How to be Proactive

There are qualified buyers all over your market, even in areas your loan officers or real estate partners haven’t been able to reach. MonitorBase automatically pre-screens potential clients from all over your community. We then send offer letters to those who meet your criteria, bringing new business in for you while reaching areas your loan officers may not have previously serviced. This can also create opportunity to meet referral partners in other areas of your community by referring them qualified buyers.  

By servicing more areas, your business will be better able to spread your market reach, with a credit pre-screen component, keeping you ahead of the competition, as well as potential legislation. 

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