FHFA: Fair Lending Data

Fair Lending Data

Fair
lending is central to the principles under which the U.S. housing
finance system operates and is a requirement of law. FHFA’s fair lending
activities include monitoring the regulated entities for fair lending
and fair housing risk and conducting examinations on their policies,
programs, and activities. FHFA monitors loan application accept rates
and other trends for fair lending risk and compliance.The data
are provided for public transparency and to promote fair lending, but do
not by themselves prove or disprove unlawful discrimination. Additional
information on FHFA's fair lending program is available on the Fair Lending Oversight page.Statistics ReportedThe accept rate represents
the proportion of applicants who were approved by the AUS and whose
loans are eligible for purchase based on their credit characteristics.
It does not represent final credit decisions concerning applicants,
which are made by lenders. The accept rate is influenced by the
population of borrowers applying for mortgage credit. The number
borrowers who are submitted to the AUS is constantly changing and
fluctuates with changes in market interest rates, affordability,
household formation, lender selection, and other market factors.
Additionally, lenders may use one or both AUS systems to assess an
applicant.The accept rate gap represents the raw
difference between the protected class accept rate and the comparison
group (Non-Hispanic white) accept rate. The accept rate ratio represents
the protected class accept rate divided by the comparison group accept
rate. These statistics help FHFA to assess the impact of changes in the
population applying for credit and policy changes in the AUS.Loans
that are accepted by the AUS and originated by lender may or may not
result in an Enterprise loan acquisition, or funding. Enterprise loan
acquisitions are influenced by a variety of factors such as the lender’s
propensity to securitize or retain loans on the balance sheet, pricing
and execution, as well as other economic variables. Loan acquisition
data are displayed by race and ethnicity along with the proportion (or
share) of loan acquisitions for that quarter.Race and EthnicityThe
Enterprises define race and ethnicity using non-mutually exclusive
definitions and applications are counted with each race or ethnicity
reported by a borrower or co-borrower. For example, if there are two
borrowers on a mortgage, one of whom identifies as Black and one as
Asian, the loan information would be counted in both Black and Asian
borrower categories. The exception is that white borrowers include only
those reported as non-Hispanic white and no other race. Borrowers with
missing race and ethnicity information are excluded from the population
when calculating the proportion of loan acquisitions.For race and
ethnicity categories, FHFA’s Division of Public Interest Examinations
and Office of Fair Lending Oversight uses the following naming
conventions: “White” refers to Non-Hispanic white applicants or
borrowers; “Black” refers to African American or Black borrowers;
“Latino” refers to Hispanic or Latino borrowers of any race; “American
Indian” refers to American Indian or Alaska Native borrowers (AIAN);
“Pacific Islander” refers to Native Hawaiian or Pacific Islander
borrowers; “Asian” refers to Asian borrowers.AUS DataThe
underlying data consist of application data for each Enterprise's
Automated Underwriting System (AUS) that have been transmitted to FHFA.
Fannie Mae uses Desktop Underwriter (DU), and Freddie Mac uses Loan
Product Advisor (LPA) as their respective AUS system. The data represent
the AUS recommendation for the last transaction submitted to the AUS,
excluding applications that were not scorable, applications for FHA/VA
loans, and applications identified as test cases.<br>