Hi! It’s Tory Haggerty from Tuscan Club University’s Fair Lending School and welcome to another Fair Lending Short.
In this Fair Lending Short I want to talk about knowing your data. Now we’ve talked about this in other videos, but I want to talk about it specifically from a standpoint of knowing where you’re receiving applications from, and also knowing where you’re not receiving applications from.
If you’re a HMDA Reporter, it is easy to gather this data. If you’re a HMDA Reporter and get Fair Lending software you can tell if you’re receiving applications from low and moderate income neighborhoods, which has crossover with the community reinvestment act, but also if you’re receiving applications from high minority neighborhoods. Most specifically those with 50% more minority population or majority minority census tracts.
But what you can also see, is where you are not receiving application from and most specifically if you’re not receiving applications from majority minority census tracts. So a big part of redlining is, are we penetrating all parts of our area, and are we making loans to low and moderate and high minority census tracts. If you’re not getting applications from those census tracts, you’re obviously not going to be making loans there.
When we look at data and we look at redlining cases it’s very common to look at HMDA data and see organizations that have gotten hit with redlining often make 3, 4, or 5 times fewer loans than peer lenders in their area and when you look at their application rates, their loans are 3, 4 or 5 times fewer and so are their applications.
Like we said before, this is an open book test. You should know where your applications are coming from and where they’re not coming from. How do you turn that into a positive? Well that’s a marketing opportunity, right? Share that information with your marketing team, areas where you’re not getting applications from, and tell them here’s where we need to market, and here’s where we need to put lenders and get applications from, so that we serve all parts of our assessment area.
Thanks for reading!
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