Finance and Economics Discussion Series (FEDS)
March 2000
Anatomy of a Fair Lending Exam: The Uses and Limitations of Statistics
Paul S. Calem and Stanley D. Longhofer
Abstract:
In this paper, we consider the role of statistical analysis in fair lending compliance examinations. We present a case study of an actual examination of a large mortgage lender, demonstrating how statistical techniques can be a valuable tool focusing examiner efforts to either uncover illegal discrimination or exonerate an institution so accused. Importantly, our case also highlights the limitations of such statistical techniques. The study suggests that statistical analysis combined with comparative file review offers a balanced and thorough approach to enforcement of fair lending laws.
Full paper (1217 KB Postscript)Keywords: Banks, other depository institutions, mortgages
PDF: Full Paper
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