USING HMDA DATA AS A REGULATORY SCREEN FOR FAIR LENDING COMPLIANCE

This paper describes and evaluates the Federal Reserve System's recent ly developed program designed to use HMDA data as a screening device f or fair lending enforcement. The program is designed to identify insti tutions showing potentially discriminatory patterns in their treatment of minority mortgage applicants vis-a-vis nonminority applicants. The program also selects specific loan files to pull for additional infor mation in cases where a more comprehensive evaluation might be appropr iate. This paper discusses the motivation behind the adoption of the p rogram and its innovative ''matched-pair'' method and assesses its val ue and potential shortcomings.