By Mary Ellen Podmolik
September 24, 2010
How easy is it for someone to learn all about you from your mortgage loan application?
To hear mortgage lenders and community groups tell it, it's easier than you might think.
Some of the 26 types of data from every mortgage application that's reported annually to regulators, with much of it made public, includes a property's general location and loan amount, the race, ethnicity, sex and annual income of the applicant, certain loan price information and whether the loan was approved. Even more data, including a borrower's age and credit score, is about to be collected as part of the Wall Street Reform and Consumer Protection Act.
Now regulators are discussing whether further revisions to the 35-year-old Home Mortgage Disclosure Act, ones requiring even more personal information on loan applicants, would better ensure adherence to fair lending laws.
Predictably, bankers and community groups are neatly lined up on either side of the discussion, as was evident at a hearing last week at the Federal Reserve Bank of Chicago.
Lenders say they're worried about consumer privacy. They warn that if enough data on a borrower is made public, it will be easier to identify that person and property, exposing them to the risk of fraud.
"I don't know that we should know that (much) about our neighbors," said Greg Ohlendorf, president and CEO of First Community Bank and Trust in Beecher. "That's a huge concern ... it's like handing your loan application to your neighbor."
He added, "The breaches in our world are unbelievable."
Some community organizations, however, would like to see data on borrower debt-to-income ratios, loan performance and loan servicers. The data, they argue, would make it easier to track abusive lending patterns and foreclosures.
"There are substantial concerns about the re-emergence of redlining as borrowers in communities of color devastated by the foreclosure crisis experience difficulty accessing mortgage credit," testified Geoff Smith, senior vice president at Woodstock Institute, a Chicago research and policy organization." Any enhancements to (the) data should use the current way that the data are made public as a starting point."
Janis Bowdler, deputy director of the wealth-building policy project at the National Council of La Raza, said she finds it "counterintuitive" that banks are worried about more data falling into the wrong hands, when in fact anyone willing to pay for drilled-down information can get it from private, proprietary databases.
The Federal Reserve wraps up its public hearings on the issue with one scheduled for Friday in Washington, D.C.