Liability for Discrimination Claims Based Upon Revised Regulation C

On January 1, 2004, revisions to the Federal Reserve Board’s Regulation C—which implements the Home Mortgage Disclosure Act ("HMDA")—began to require that mortgage lenders report on their "loan application registers" or "LARs" data relating to certain high-cost mortgage loans, including HOEPA loans. In particular, lenders are now required to identify the geographic location of high-cost loans and the interest rates on certain of those loans—which will facilitate comparing the market areas in which high-cost loans are originated with markets in which prime loans are predominantly made.

We are very concerned that, when results of these changes are published by the federal government in 2005, private parties and governmental agencies will bring fair lending lawsuits against the mortgage banking community. Whereas in the past, readily available data did not exist to support discrimination claims against mortgage lenders based upon the theories of disparate treatment or disparate impact,