NPA Wins on Transparency in Lending!

After years of pushing and a series of meetings with Fed Chairman Bernanke, National People’s Action is pleased to report that the Federal Reserve will hold hearings this summer and fall on expanding the Home Mortgage Disclosure Act.

The Home Mortgage Disclosure Act (HMDA), which NPA spearheaded passage in 1975, mandates that banks report to regulators and the general public the race and ethnicity, as well as the census tract, of people they approve and deny loans to. When originally passed, the issue was redlining, where banks refused to lend in low-income neighborhoods or communities of color. We took our stories to Congress, but without proof, nothing could get done. HMDA confirmed what we already knew – banks were redlining certain neighborhoods. Armed with data, NPA built the case for passage of the Community Reinvestment Act, which outlawed redlining.

Since 1975, the mortgage industry has changed dramatically. Instead of starving our neighborhoods of credit, banks have been flooding them with toxic products. Predatory loan terms like exploding adjustable rates, hidden fees, and balloon payments helped drive a foreclosure crisis that sent our economy into a deep recession. So, what was once a matter of access to credit, is now an issue of equal access to QUALITY credit.

By expanding HMDA we have the opportunity to make banks not just report on where and to whom they are making and denying loans, but to disclose the terms of those loans, including interest rate, fees, and other terms of the loan. This data will help us hold bank accountable to the communities in which they serve and profit and will help us develop public policy that bring new levels of fairness into the mortgage market.

Though NPA has long been pushing to expand the Home Mortgage Disclosure Act, we recently upped the ante, taking hundreds of people to the office of Federal Reserve Chairman Ben Bernanke in 2008. We have since had three meetings with the Fed Chairman, and teamed up with our allies at the PICO National Network to hold field meetings in nine cities with Federal Reserve policy officers. At the field meetings and the meetings with Chairman Bernanke, we’ve continually built our case that an expanded Home Mortgage Disclosure Act is critical to ensuring equal access to credit and to preventing another mortgage meltdown.

The fight is just beginning. The big banks and mortgage companies do not want to expand transparency and disclosure. They will fight us every step of the way. The hearings will take place this summer in Atlanta, San Francisco and Chicago, with a final hearing in Washington D.C. September 24th.

NPA and our allies will be organizing to ensure that real transparency results from these hearings. Sign up to receive updates and to find out how you can join the fight to hold banks accountable.