Mortgage Market Channels and Fair Lending: An Analysis of HMDA Data

For decades “fair lending” issues have received attention in both public policy arenas and the popular press, but the release of 2004 Home Mortgage Disclosure Act (HMDA) data with loan pricing information has sparked a new round of discussion. Using these data, the paper seeks to better understand the rapid growth of subprime lending, the organization of U.S. capital markets, and the many distinct mortgage channels that link mortgage investors with mortgage borrowers. In particular, the paper seeks to advance the discussion by examining how the structure of the mortgage industry and the uneven application of mortgage market regulations combine to permit unfair mortgage pricing with respect to race and ethnicity…