February, 1998

Access To The Dream:
Mortgage Lending in Texas

Written by the Consumers Union Southwest Regional Office.
on behalf of the Texas Community Reinvestment Coalition

The Laws and the Data

Congress designed the Equal Credit Opportunity Act and the Community Reinvestment Act (CRA) to ensure that all consumers have fair access to capital and financial services. The CRA created a new relationship between financial institutions that accept deposits (banks, credit unions, and savings and loans) and their local communities.

Unlike the other fair lending regulations, which outlaw lending discrimination based on a borrower's race, sex, national origin, or other characteristics, CRA primarily addresses geographic discrimination known as "redlining" -the practice of refusing to lend in or provide services to targeted neighborhoods based on race, ethnic composition or any standard other than creditworthiness.

The Home Mortgage Disclosure Act (HMDA) allows regulators and the public to determine whether banks are meeting their CRA responsibility by requiring lenders to report demographic information on every loan applicant and every loan. Lenders must report an applicant's income, race and sex, the amount of the loan, the purpose of the loan, the type of home and the census tract location of the home.

Amendments to HMDA in the early 1990s increased the disclosure requirements, thereby strengthening the effectiveness of HMDA data as a tool for analyzing lenders' performance in underserved communities. Although HMDA data has its limitations, the information collected under the regulation has been widely recognized as a useful starting point for evaluating equitable lending.