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Missing Race Data in HMDA and the Implications for the Monitoring of Fair Lending Compliance

by Jason Dietrich


Home Mortgage Disclosure Act (HMDA) data contains high and increasing percentages of applications that lack race data. As HMDA data are an integral part of current efforts to monitor banks' compliance with fair lending laws, regulators must understand the reasons for, and consequences of, these patterns. Using HMDA data from 1993 to 1999, this study examines trends in missing race data, discusses possible reasons for the findings, and summarizes the salient regulatory issues. The results indicate that race data are missing for systematic reasons and therefore introduce bias and efficiency problems into fair lending exams. Applications that contain race data have higher origination rates than applications without race data, and applications from Blacks and Hispanics may be more likely to be without race data than whites. These findings suggest that denial rate disparities used during early stages of fair lending exams may be understated and that statistically-modeled estimates of racial effects used during latter stages may be overstated.


As with all OCC Working Papers, the opinions expressed in this paper are those of the author alone, and do not necessarily reflect the views of the Office of the Comptroller of the Currency or the Department of the Treasury.

Any whole or partial reproduction of material in this paper should include the following citation: Jason Dietrich " Missing Race Data in HMDA and the Implications for the Monitoring of Fair Lending Compliance, " Office of the Comptroller of the Currency, E&PA Working Paper 2001-1, March 2001.


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