Tuscan Club University

Peer Data

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Hi! It’s Tory Haggerty from Tuscan Club University’s Fair Lending School and welcome to another Fair Lending Short. In this Fair Lender Short I want to talk about Peer Data.

Peer Data can be a wonderful thing. So if you’re a HMDA reporter, first of all you should probably be reviewing your HMDA data on an annual basis. If you have a ton of HMDA data, you should probably review it on a quarterly basis. 

But what’s Peer Data? Peer Data is the data from other lenders in your area that also make home loans.  So that could other banks, or credit unions or mortgage lenders.  Why is Peer Data important?  It’s important because it helps tell the story of the needs and demands in your area. So if I review your HMDA data, and let’s say, you’re not making loans in a certain high minority area, that could be an indicator of risk.  However if all of your peers are also not making loans in that high minority area, that can say that perhaps maybe there isn’t as much demand in that high minority area, or it can also say everybody is discriminating in that high minority area.  

If you have higher denial rates to a certain prohibited basis group, or if you have higher origination rates of maybe government guaranteed loans, talking steering risks, but peers are also performing the same way, you may look like an outlier for your own data. But when you compare it to peer data, you may not be an outlier.  The same thing on the inverse.  Your data may look good, but when you compare it to Peer Data, you could actually be lagging behind Peer Data significantly. 

Spoiler alert, most Redlining cases, go right off of Peer Data.  If you go back and look at a lot of Redlining cases, those organizations frequently take applications and originate loans in high minority areas, two, three and four, or five times less often than what their peers are.  And that’s an easy way to spot Redlining issues. 

If you are originating loans in an area three and four times less often that what peers are, I guarantee you have major Redlining risks that are going to need to be addressed immediately. Use the Peer Data –  it only comes out once a year.  You can review your HMDA data quarterly, but we only get Peer Data once a year.  Use that Peer Data, compare the Peer Data and make sure that you understand how you’re performing in comparison to yourself and also your peers.

Thanks for reading!

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