ReutersFed's Olson says mortgage data raise questionsTuesday June 13, 11:16 am ET
WASHINGTON (Reuters) - Federal Reserve Governor Mark Olson said on Tuesday data collected under the U.S. Home Mortgage Disclosure Act raise troubling questions about lending to black and Hispanic borrowers and more research is needed.
"Black and Hispanic borrowers are more likely to obtain mortgage loans from institutions that tend to specialize in subprime lending," Olson said in testimony prepared for delivery to the House of Representatives Subcommittee on Financial Institutions.
In remarks that steered clear of the broad economy and monetary policy, Olson said while this may in part reflect such factors as borrower preference or credit scores not included in the HMDA data, there may be "more troubling causes."
"Segmentation may stem from borrowers being steered to lenders that charge higher prices than what is warranted by the credit characteristics of these borrowers," Olson said.
"Borrowers may also have different levels of financial literacy, or their knowledge of the mortgage lending process may be uneven -- for example, they may not understand the importance of shopping and negotiating for the best loan terms," he added, saying more research is needed on these subjects.
"The board will continue to conduct and promote research that explores the racial and ethnic differences in the incidence of higher-priced lending," Olson said.
He said the Fed will conduct hearings in June and July on the home equity lending market.