review the history of hmda as a backdrop for the new hmda pricing data. the federal reserve is still editing these data, but i will also provide a preview of what they are likely to show. hmda history in brief the regulations implementing hmda require that lenders disclose aspects of their home mortgage application and lending activities, including the applicant ’ s or borrower ’ s race, ethnicity, sex, and income. also reported are characteristics of the loan, such as the amount and purpose, and the location of the property securing the loan. but it was not always this way. when hmda was originally enacted in the mid - 1970s, the only information required to be reported was the number and dollar amount of loans, by census tract. congress, concerned about the role that financial institutions ’ lending policies might play in the deterioration of our cities, designed hmda to combat the practice known as “ redlining, ” in which institutions took deposits but did not lend in their local communities. initially, hmda data simply helped the public and regulators track where an institution was lending and, more important, where it was not. not until the late 1980s did the data collection expand to include race, sex, and income levels for each loan application, along with whether the application was approved or denied. by then, the issue was whether minority borrowers were denied mortgage loans more frequently than white borrowers and whether those disparities reflected discrimination in mortgage underwriting. today, after significant changes in the mortgage market brought on by technological advances, deregulation, and financial innovation, the credit availability question is no longer limited to whether minority borrowers have access to credit but, rather, at what price that credit is available. moreover, there are new questions about whether the price of credit always reflects the lender ’ s risk or cost, or whether it is tied in any way to the race or sex of the borrower. the technological changes have led to strong growth in the subprime mortgage market. in general, this growth appears to be a positive development. homeownership is at record highs among low - income and minority borrowers, many of whom would not have qualified for mortgages several years ago, and most of whom have been able to make their mortgage payments. at the same time, the increase in mortgage lending among lower - income and minority borrowers has been accompanied by reports of abusive, unethical, and, in some cases, illegal lending practices. i am

press accounts have implied, the data indicate that blacks and hispanics are more likely to take out higher - priced loans than non - hispanic whites, and that asians are the least likely to have higher - priced loans. these preliminary data also seem to indicate that the actual prices paid by those taking out higher - priced loans are about the same for different racial groups. until the editing process is complete, more details cannot be provided. needless to say, everyone will have an opportunity to review the final data when they are released in september. conclusion in closing, i cannot emphasize enough the importance of your role. by understanding the potential usefulness and limitations of the data, and conveying those messages clearly, we can promote a more efficient market and compliance with anti - discrimination laws without unfairly tarnishing the reputations of particular lenders. no one will be served if lenders are unwilling to enter, or remain in, certain higher - priced segments of the market. the most effective way to lower the cost of credit to higher - risk borrowers is to promote a competitive marketplace. and one of the most effective ways of ensuring competition is to make data available.