Regulators are lenders' most immediate HMDA threat.

Position:Briefing Book - Home Mortgage Disclosure Act

Despite the relative calm following last fall's release of the 2004 Home Mortgage Disclosure Act (HMDA) data, mortgage lenders should remain on guard as loan numbers are crunched and racial disparities--real or imagined--are analyzed.

But it's not the plaintiffs bar and the specter of the class-action lawsuit that lenders should fear most, but rather the more immediate threat of government regulatory scrutiny--which has already begun in earnest, according to experts at MBA's Legal Issues in Mortgage Technology Conference in San Diego in December.

"I don't mean to minimize the problem of class-action [lawsuits], but we've got a real problem that's here now," said Paul Hancock, an attorney with Miami-based Hogan & Hartson LLP and a former government enforcement lawyer. "I think lenders are making a mistake if they aren't concentrating on satisfying their own regulators and government agencies."

As we wrote in October, a Federal Reserve Board's analysis of the HMDA data noted a "sizable narrowing" in unexplainable differences in the incidence of high-priced lending between minority and non-minority borrowers (see Mortgage Banking, October 2005, p. 10).

At the individual lender level, the Fed researchers found that about 2 percent of the 8,853 lending institutions covered by HMDA throughout the country exhibited a "statistically significant difference" in the incidence of...

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