Hello, LOs!
I wanted to take a look at the industry response so far to a bombshell report from accountability data journalism outlet The Markup.
The investigation found that even when accounting for many factors, lenders were 40% more likely to deny Latino applicants, 50% more likely to deny Asian/Pacific Islander applicants, and 70% more likely to deny Native American applicants when compared with similar white applicants, co-authors Emmanuel Martinez and Lauren Kirchner found. Lenders were 80% more likely to reject Black applicants than similar white applicants, the analysis found.
Those representing lenders cried foul almost immediately.
The Mortgage Bankers Association responded the same day with a scorching response to the findings. Basically, the trade group said The Markup's analysis had some serious shortfalls, and they didn't appreciate it.
Specifically, the trade group said the analysis was incomplete because it did not include a borrower's credit score or credit history. The analysis was also limited to conventional loans, meaning they left out those guaranteed by the Federal Housing Administration, which caters to borrowers with lower credit scores and small down payments.
"Reporting such as this, which is not only deeply flawed but clearly biased in its premise, harms the matter at hand because it misrepresents the problems and solutions needed to solve the very serious issues that result in unequal outcomes related to Black homeownership and wealth-building," the MBA wrote.
But there was another potential response that I found more interesting. The authors wrote that, weeks after they had started asking the GSEs questions about their underwriting algorithms, Fannie Mae announced it would consider on-time rental payments in its underwriting.
The reporters asked about the timing of that change, but a Fannie Mae spokesperson told the outlet it wanted prospective borrowers "to have this option as soon as possible," and was apparently silent about what prompted the move.
What do you think prompted the Federal Housing Finance Agency to consider on-time rental payments in Fannie Mae's underwriting process?
Georgia Kromrei
Senior Mortgage Reporter, HousingWire
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