Mortgage Lending, Social Responsibility, and Public Policy: Some Perspectives on HMDA and CRA

This paper sets out a simple model of the neighborhood housing market. With this as a frame of reference it reviews some of the concerns associated with redlining and relates these to evidence presented at the HMDA and CRA Hearings. Does this evidence support the claims that lenders were acting irresponsibly? What if anything can be concluded from such evidence about the alleged role of inadequate and discriminatory lending in causing urban decay? The HMDA was approved so that citizens would have access to data which would enable them to appraise the social responsibility shown by lenders; and the CRA, so that regulatory agencies would have a tool to encourage lenders to do better. How well do the Acts fulfill these intentions?