Examining Flat Files, Determining Discrepancies

By Ashton Eley, Oct. 31, 2016

In examining the differences between combined 4-1 and 4-2 Home Mortgage Disclosure Act data and the more comprehensive 2014 LAR dataset, I found the most startling contrast is the denial rates for both whites and African Americans changed significantly. Whites have a 20 percent rejection rate with the new data but have only a 13 percent according to our previous calculations using the limited HMDA dataset. Blacks similarly went up to 22 percent in the new data from 15 percent in the previous analysis.

From running different scenarios using Excel pivot tables, I found the reason for this change is most likely not because of farm loans given that they do not make up more than 5 percent of the denial rate of any racial/ethnic category. When looking at loan purposes, we know that the HMDA looked only at home purchase while the LAR data looks at purchase as well as home improvement and refinancing. Home improvement did not seem to affect the denial rate substantially, but refinancing accounted for nearly half (26 of 53) the African Americans denied and about 45 percent (1440 of 3100) of the Whites denied. This is obviously the significant difference in the LAR and HMDA data.

The Native Hawaiian and other Pacific Islanders is the only group that went down because, as seen in the data, they had the lowest denial rate, 16 percent, when it came to home loans with the purpose of refinancing. Their total denial rate for the LAR data was at 21 percent. This differs from the HMDA data where Native Hawaiian and other Pacific Islanders had a denial rate of 28 percent, the second highest.

Resources for the HMDA Flat Files

Code Sheets

For the Loans
2014hmdalarrecordformat

Codes
2014_lar_hmdacodesheet

Banks
2014hmdainstitutionrecordformat

HMDA Manual

hmda-key-2013guide

HMDA Glossary

https://www.ffiec.gov/hmda/glossary.htm