AFR in the News: Consumer Groups Want Fair Lending Data Added to Mortgage Settlement

“Consumer groups are urging the monitor of the national mortgage settlement to add data on race, ethnicity and geography to determine whether the five largest servicers are offering relief to communities hit hardest by foreclosures,” The American Banker reports.

In an Oct. 31 article, The American Banker cites a letter in which AFR’s Foreclosure Working Group asks Joseph Smith, the monitor of the national mortgage settlement, to incorporate race, ethnicity, and geography into his metrics for evaluating the fair-lending dimension of the settlement. Smith speaks of “helpful discussions” that he has had “with consumer advocates about using Home Mortgage Disclosure Act-type data that could test for anti-discriminatory policies and procedures.” But the story goes on to observe that Smith may “not have the authority to create a so-called ‘outcomes-based metric’ regarding discrimination, which would involve sampling of loan level data against a proposed benchmark.”

“The foreclosure working group has proposed a fair lending metric that is ‘process-based,’ and would allow Smith to comply with the settlement’s language,” the article says. “The metric would require providing principal reductions to communities with high foreclosure rates.”

Mark Ladov of the Brennan Center for Justice (and a member of the AFR working group) points out that housing counselors and legal advocates have so far not seen any broad-based relief going to hard-hit black and Hispanic communities. “Our hope was that this would transform how banks handle these issues,” Ladov told The American Banker. “Instead, it’s like a lottery, with the occasional borrower getting a huge write-down, and it’s scattershot, with the hardest-hit communities not getting much.”