Legal Developments: Third Quarter, 2007
Order Issued under Bank Holding Company Act
National City Corporation
Cleveland, Ohio
Order Approving the Acquisition of a Savings Association and Notice to Engage in Nonbanking Activities
National City Corporation ("National City"), a financial holding company within the meaning of the Bank Holding Company Act ("BHC Act"), has requested the Board's approval under sections 4(c)(8) and 4(j) of the BHC Act and section 225.24 of the Board's Regulation Y1 to acquire Mid America Bank, fsb ("Mid America"), a savings association, by merging with its holding company, MAF Bancorp, Inc. ("MAF"), both of Clarendon Hills, Illinois. National City also has requested the Board's approval under those provisions to acquire St. Francis Equity Properties, Inc. ("St. Francis"), Brookfield, Wisconsin, a subsidiary of Mid America, and thereby engage in community development activities in accordance with section 225.28(b)(12) of the Board's Regulation Y.2
Notice of the proposal, affording interested persons an opportunity to submit comments, has been published in the Federal Register (72 Federal Register 28,491 (2007)). The time for filing comments has expired, and the Board has considered the proposal and all comments received in light of the factors set forth in section 4 of the BHC Act.
National City, with total consolidated assets of $138.5 billion, is the 13th largest depository organization in the United States, controlling deposits of approximately $88.6 billion, which represent approximately 1 percent of the total amount of deposits of insured depository institutions in the United States.3 National City controls one insured depository institution, National City Bank, Cleveland, Ohio, that operates in eight states.4 National City is the ninth largest depository organization in Illinois, controlling deposits of approximately $7.2 billion, which represent approximately 2.3 percent of the total amount of deposits of insured depository institutions in the state ("state deposits").
MAF has total consolidated assets of approximately $10.4 billion and Mid America, MAF's only subsidiary insured depository institution, operates in Illinois and Wisconsin. MAF is the 12th largest depository organization in Illinois, controlling deposits of approximately $5.7 billion.
On consummation of the proposal, National City would remain the 13th largest insured depository organization in the United States, with total consolidated assets of approximately $150.7 billion. National City would control deposits of approximately $95.7 billion, representing 1.4 percent of the total amount of deposits of insured depository institutions in the United States. In Illinois, National City would become the fourth largest insured depository organization, controlling deposits of approximately $12.9 billion, which represent approximately 4 percent of state deposits.
The Board previously has determined by regulation that the operation of a savings association by a bank holding company is closely related to banking for purposes of section 4(c)(8) of the BHC Act.5 The Board requires that savings associations acquired by bank holding companies conform their direct and indirect activities to those permissible for bank holding companies under section 4 of the BHC Act.6 National City has committed to conform all the activities of Mid America to those that are permissible under section 4(c)(8) of the BHC Act and Regulation Y. The Board also has determined that community development activities are closely related to banking, and National City has committed to conduct those activities in accordance with the Board's regulations and orders.7
Section 4(j)(2)(A) of the BHC Act requires the Board to determine that the proposed acquisition of Mid America and St. Francis "can reasonably be expected to produce benefits to the public that outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices."8 As part of its evaluation under these public interest factors, the Board reviews the financial and managerial resources of the companies involved, the effect of the proposal on competition in the relevant markets, and the public benefits of the proposal.9 In acting on a notice to acquire a savings association, the Board also reviews the records of performance of the relevant insured depository institutions under the Community Reinvestment Act ("CRA").10 The Board has considered the proposal under these factors in light of all the facts of record, including confidential supervisory and examination information, publicly reported financial and other information, and public comments submitted on the proposal.
Competitive Considerations
The Board has considered carefully the competitive effects of National City's acquisition of MAF, including Mid America and St. Francis.11 National City Bank and Mid America compete directly in four banking markets in Illinois: Aurora, Chicago, Elgin, and Joliet.12 The Board has reviewed carefully the competitive effects of the proposal in each of these banking markets in light of all the facts of record. In particular, the Board has considered the number of competitors that would remain in the markets, the relative share of total deposits of National City Bank and Mid America in the markets ("market deposits"),13 the concentration level of market deposits and the increase in this level as measured by the Herfindahl-Hirschman Index ("HHI") under the Department of Justice Guidelines ("DOJ Guidelines"),14 and other characteristics of the markets.
Consummation of the proposal would be consistent with Board precedent and the DOJ Guidelines in each relevant banking market. After consummation of the proposal, the Chicago and Elgin markets would remain unconcentrated, and the Aurora and Joliet markets would remain moderately concentrated. In each of these markets, the changes in the HHI measure of concentration would be small and numerous competitors would remain. Based on all the facts of record, the Board has concluded that consummation of the proposal would not have a significantly adverse effect on competition or on the concentration of resources in any of the four banking markets where National City Bank and Mid America compete directly or in any other relevant banking market.
The Board also has considered the effects of the proposed transaction on competition in community development activities. National City and St. Francis do not both engage in community development activities in any relevant market. Moreover, the market for this nonbanking activity is local in scope and unconcentrated, and there are numerous participants that engage in these activities. Based on all the facts of record, the Board concludes that consummation of the proposal would not have a significantly adverse effect on competition among providers of community development activities in any relevant market.
Financial and Managerial Resources
In reviewing the proposal under section 4 of the BHC Act, the Board has carefully considered the financial and managerial resources of National City, MAF, and their subsidiaries. The Board also has reviewed the effect the transaction would have on those resources in light of all the facts of record, including confidential reports of examination, other supervisory information from the primary federal supervisors of the organizations involved in the proposal, and publicly reported and other financial information, including information provided by National City.
In evaluating financial resources in expansion proposals by banking organizations, the Board reviews the financial condition of the organizations involved on both a parent-only and consolidated basis, as well as the financial condition of the subsidiary insured depository institutions and significant nonbanking operations. In this evaluation, the Board considers a variety of information, including capital adequacy, asset quality, and earnings performance. In assessing financial resources, the Board consistently has considered capital adequacy to be especially important. The Board also evaluates the financial condition of the combined organization at consummation, including its capital position, asset quality, and earnings prospects, and the impact of the proposed funding of the transaction.
The Board has carefully considered the proposal under the financial factors. National City, MAF, and their subsidiary depository institutions are well capitalized and would remain so on consummation of the proposal. Based on its review of the record, the Board finds that National City has sufficient financial resources to effect the proposal. The proposed transaction is structured as a share exchange.
The Board also has considered the managerial resources of the organizations involved and the proposed combined organization. The Board has reviewed the examination records of National City, MAF, and their subsidiary depository institutions, including assessments of their management, risk-management systems, and operations. In addition, the Board has considered its supervisory experiences and those of the other relevant financial supervisory agencies with the organizations and their records of compliance with applicable banking law and with anti-money-laundering laws. National City, MAF, and their subsidiary depository institutions are considered to be well managed. The Board also has considered National City's plans for implementing the proposal, including the proposed management after consummation.
Based on all the facts of record, the Board has concluded that the financial and managerial resources of the organizations involved in the proposal are consistent with approval under section 4 of the BHC Act.
CRA Performance Records
As previously noted, the Board considers the records of performance under the CRA of the relevant insured depository institutions when acting on a notice to acquire a savings association. The CRA requires the federal financial supervisory agencies to encourage insured depository institutions to help meet the credit needs of the local communities in which they operate, consistent with their safe and sound operation, and requires the appropriate federal financial supervisory agency to take into account a relevant depository institution's record of meeting the credit needs of its entire community, including low- and moderate-income ("LMI") neighborhoods, in evaluating bank expansionary proposals.15
The Board has considered carefully all the facts of record, including evaluations of the CRA performance records of National City's and MAF's subsidiary depository institutions, data reported under the Home Mortgage Disclosure Act ("HMDA")16 by the subsidiaries of National City and MAF that engage in home mortgage lending, other lending data reported under the CRA, other information provided by National City and MAF, confidential supervisory information provided by the federal supervisor of each bank, and public comment received on the proposal.
The Board received a comment related to the CRA performance records of National City Bank and Mid America. The commenter alleged that in the Milwaukee area, National City has not adequately served the mortgage credit needs of LMI borrowers17 and that Mid America has not provided adequate levels of loans of less than $100,000 to businesses.18
As provided in the CRA, the Board has evaluated the proposal in light of the evaluations by the appropriate federal supervisors of the CRA performance records of the relevant insured depository institutions. An institution's most recent CRA performance evaluation is a particularly important consideration in the applications process because it represents a detailed, on-site evaluation of the institution's overall record of performance under the CRA by its appropriate federal supervisor.19
National City Bank received an "outstanding" rating at its most recent CRA performance evaluation by the Office of the Comptroller of the Currency ("OCC"), as of June 30, 2005 ("NC Evaluation").20 Mid America received an "outstanding" rating at its most recent CRA performance evaluation by the Office of Thrift Supervision ("OTS"), as of July 18, 2005 ("MA Evaluation"). National City has indicated that Mid America's CRA program will remain in place on consummation of the proposal.
CRA Performance of National City Bank. In addition to the overall "outstanding" rating that National City Bank received in the NC Evaluation, the bank received separate overall "outstanding" or "satisfactory" ratings for its CRA performance in each of the states reviewed. Examiners reported that the bank's distribution of HMDA loans to borrowers of different income levels was excellent, as was the bank's distribution of small loans to businesses in LMI census tracts.21 Examiners stated that the bank's record of community development lending and qualified community development investments demonstrated excellent responsiveness to community credit and investment needs.
Since the NC Evaluation, National City has continued its high level of CRA lending activity. In 2005 and 2006, it made more than $22 billion HMDA-reportable loans in National City Bank's assessment areas. National City also made approximately $1.2 billion in total qualified community development loans during 2005 and 2006 in the bank's assessment areas.
Examiners rated National City's performance under the investment test as "outstanding" or "high satisfactory" in most of the states reviewed. They reported that the bank's investments were complex in nature and demonstrated excellent responsiveness to the needs of the community. During the evaluation period, the bank made qualified investments totaling more than $182 million and contributed more than $5 million to charities with community development purposes.
National City continued to make a significant amount of qualified investments since the NC Evaluation. In 2005 and 2006, National City made approximately $222 million in qualified investments and grants in the bank's assessment areas. These investments included several projects that created affordable housing through the low-income-housing tax credit program.
Examiners concluded that the bank's retail banking services generally were accessible to geographies and individuals of different income levels. They also reported that the bank generally provided a high level of community development services, including service by bank employees on the boards of nonprofit groups involved in providing affordable housing and other services to LMI individuals.
CRA Performance of Mid America. As noted, Mid America received an overall "outstanding" rating in the MA Evaluation.22 Under the lending test, examiners commended the savings association's responsiveness to the credit needs of its assessment areas. Examiners characterized Mid America as a market leader in originating mortgages reportable under HMDA in LMI geographies and to LMI borrowers when compared with its peer group. In addition, they commended Mid America for offering numerous innovative and flexible programs to LMI borrowers, including several mortgage lending programs in the Chicago and Milwaukee areas under which the savings association made more than 1,100 loans totaling more than $167 million. Examiners also reported that the savings association's geographic distribution of small loans to businesses was good and that a significant percentage of Mid America's small loans to businesses were in amounts of $100,000 or less.
In the MA Evaluation, examiners described Mid America's performance as a community development lender as excellent. During the evaluation period, the savings association originated community development loans totaling $53.4 million, including more than $40 million in multifamily loans that supported affordable housing in LMI areas. Examiners also reported that Mid America made qualifying community development investments during the evaluation period totaling $18.3 million, which included investments in Chicago-based community investment funds for affordable housing development and in 14 projects in Wisconsin that were eligible for the low-income housing tax credit.
Examiners noted that Mid America's retail delivery systems were reasonably accessible to all geographies in its assessment areas. In addition, examiners reported that the bank provided a reasonable level of community development services and noted that bank employees conducted more than 200 seminars on homebuying and served on the boards of organizations that address community needs such as affordable housing and educational programs for inner-city youths.
Conclusion on CRA Performance. Based on a review of the entire record, and for the reasons discussed above, the Board has concluded that considerations relating to the CRA performance records of the relevant depository institutions are consistent with approval.
Other Considerations
In light of public comments on the proposal, the Board also has carefully considered the fair lending record and HMDA data reported by subsidiaries of National City and MAF in its evaluation of the public interest factors. A commenter alleged, based on 2005 HMDA data for the Milwaukee MSA, that National City made a disproportionately small number of mortgage loans to female borrowers and made a disproportionately high number of high-cost loans to Hispanic borrowers.23 The commenter also alleged that Mid America made a disproportionately small number of prime loans to African American borrowers. The Board has analyzed the 2005 and 2006 HMDA data reported by the insured depository institution subsidiaries of National City and MAF in their primary assessment areas, including the Milwaukee MSA, and statewide in the states where those institutions operated branches.
Although the HMDA data might reflect certain disparities in the rates of loan applications, originations, denials, or pricing among members of different racial or ethnic groups in certain local areas, they provide an insufficient basis by themselves on which to conclude whether or not National City or MAF is excluding or imposing higher credit costs on those groups on a prohibited basis. The Board recognizes that HMDA data alone, even with the addition of pricing information, provide only limited information about the covered loans.24 HMDA data, therefore, have limitations that make them an inadequate basis, absent other information, for concluding that an institution has engaged in illegal lending discrimination.
The Board is nevertheless concerned when HMDA data for an institution indicate disparities in lending and believes that all lending institutions are obligated to ensure that their lending practices are based on criteria that ensure not only safe and sound lending but also equal access to credit by creditworthy applicants regardless of their race or ethnicity. Because of the limitations of HMDA data, the Board has considered these data carefully and taken into account other information, including examination reports that provide on-site evaluations of compliance by National City, MAF, and their subsidiaries with fair lending laws. The Board has consulted with the OCC and the OTS about the fair-lending and consumer-protection compliance records of National City Bank and Mid America.
The record indicates that National City and MAF have taken steps to ensure compliance with fair lending and other consumer protection laws. National City has a centralized compliance function and has implemented corporate-wide compliance policies and procedures to help ensure that all National City business lines comply with all fair lending and other consumer protection laws and regulations. It employs compliance officers and staff responsible for compliance training and monitoring, and conducts file reviews for compliance with federal and state consumer protection rules and regulations for all product lines and origination sources. National City also regularly performs self-assessments of its compliance with fair lending laws and provides training in fair lending policy for its employees. MAF also employs compliance techniques, such as a second-review process for mortgage loans and annual fair lending training for its employees. MAF also conducts internal testing of products and practices for illegal discrimination, which includes testing for potential steering of certain products to minority borrowers and the use of regression analysis of credit and pricing decisions. National City has indicated that Mid America's fair lending and consumer compliance program will remain in place on consummation of the proposal.
The Board also has considered the HMDA data in light of other information, including the CRA performance records of National City Bank and Mid America. Based on all the facts of record, the Board has concluded that the fair lending record and HMDA data of National City and MAF are consistent with approval under section 4 of the BHC Act.
Public Benefits
As part of its evaluation of the public interest factors under section 4 of the BHC Act, the Board also has reviewed carefully the public benefits and possible adverse effects of the proposal. The record indicates that consummation of the proposal would result in benefits to consumers and businesses currently served by Mid America. National City has represented that the proposed transaction would provide Mid America's customers with expanded products and services, including a wider range of commercial lending products, brokerage, and trust services. In addition, National City has represented that its acquisition of St. Francis would facilitate the provision of low-income housing, including affordable housing for seniors, in Wisconsin.
The Board has determined that the conduct of the proposed nonbanking activities within the framework of Regulation Y and Board precedent is not likely to result in adverse effects, such as undue concentrations of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices. Based on all the facts of record, the Board has concluded that consummation of the proposal can reasonably be expected to produce public benefits that would outweigh any likely adverse effects. Accordingly, the Board has determined that the balance of the public benefits under section 4(j)(2) of the BHC Act is consistent with approval.
Conclusion
Based on the foregoing and all the facts of record, the Board has determined that the proposal should be, and hereby is, approved. In reaching its conclusion, the Board has considered all the facts of record in light of the factors that it is required to consider under the BHC Act. The Board's approval is specifically conditioned on compliance by National City and Mid America with the conditions imposed in this order and the commitments made to the Board in connection with the notice. The Board's approval also is subject to all the conditions set forth in Regulation Y, including those in sections 225.7 and 225.25(c),25 and to the Board's authority to require such modification or termination of the activities of the bank holding company or any of its subsidiaries as the Board finds necessary to ensure compliance with, and to prevent evasion of, the provisions of the BHC Act and the Board's regulations and orders issued thereunder. For purposes of this action, these conditions and commitments are deemed to be conditions imposed in writing by the Board in connection with its findings and decision herein and, as such, may be enforced in proceedings under applicable law.
The acquisition shall not be consummated later than three months after the effective date of this order, unless such period is extended for good cause by the Board or by the Federal Reserve Bank of Cleveland, acting pursuant to delegated authority.
By order of the Board of Governors, effective August 29, 2007.
Voting for this action: Chairman Bernanke, Vice Chairman Kohn, and Governors Warsh, Kroszner, and Mishkin.
Robert deV. Frierson
Deputy Secretary of the Board
Appendix
| Bank | Rank | Amount of deposits (dollars) | Market deposit shares (percent) | Resulting HHI | Change in HHI | Remaining number of competitors |
|---|---|---|---|---|---|---|
| Aurora--the southern three tiers of townships in Kane County (Virgil, Compton, St. Charles, Kaneville, Blackberry, Geneva, Batavia, Big Rock, Sugar Grove, and Aurora townships); Little Rock, Bristol, Oswego, Fox, and Kendall townships in Kendall County; and Sandwich township in DeKalb County | ||||||
| National City Pre-Consummation | 14 | 110,529 | 1.6 | 1,041 | -12 | 40 |
| MAF | 22 | 68,727 | 1.0 | 1,041 | -12 | 40 |
| National City Post-Consummation | 6 | 247,982 | 3.6 | 1,041 | -12 | 40 |
| Chicago--Cook, Du Page, and Lake counties | ||||||
| National City Pre-Consummation | 12 | 4,269,259 | 2.0 | 741 | -4 | 183 |
| MAF | 17 | 2,427,389 | 1.1 | 741 | -4 | 183 |
| National City Post-Consummation | 4 | 9,124,037 | 4.1 | 741 | -4 | 183 |
| Elgin--Marengo, Seneca, Nunda, Riley, Coral, Grafton, and Algonquin townships in McHenry County; and the northern two tiers of townships in Kane County (Hampshire, Rutland, Dundee, Burlington, Plato, and Elgin townships) | ||||||
| National City Pre-Consummation | 37 | 12,979 | .2 | 571 | 18 | 37 |
| MAF | 8 | 284,241 | 4.8 | 571 | 18 | 37 |
| National City Post-Consummation | 2 | 581,461 | 9.4 | 571 | 18 | 37 |
| Joliet--Will County (excluding Florence, Wilmington, Reed, Custer, and Wesley townships); Aux Sable township in Grundy County; and Na-Au-Say and Seward townships in Kendall County | ||||||
| National City Pre-Consummation | 7 | 245,060 | 3.0 | 1,200 | -8 | 48 |
| MAF | 24 | 69,879 | .9 | 1,200 | -8 | 48 |
| National City Post-Consummation | 4 | 384,817 | 4.7 | 1,200 | -8 | 48 |
Note: All rankings, market deposit shares, and HHIsare based on thrift deposits weighted at50 percent, except that MAFs thrift institution deposits are weighted at 50 percent pre-merger and 100 percent post-merger.
1. 12 U.S.C. §§1843(c)(8) and (j); 12 CFR
225.24. Return to text
2. 12 CFR 225.28(b)(12). National City also proposes to
acquire Mid America Insurance Agency, Inc., Clarendon Hills, and Mid
America Re, Inc., Burlington, Vermont, in accordance with section
4(k) of the BHC Act, 12 U.S.C. §1843(k). Return to text
3. Asset and nationwide deposit-ranking data are as of
March 31, 2007. Statewide deposit and ranking data are as of
June 30, 2006, and reflect merger activity through July 5,
2007. In this context, insured depository institutions include
commercial banks, savings banks, and savings associations. Return to text
4. National City Bank operates branches in Florida, Illinois,
Indiana, Kentucky, Michigan, Missouri, Ohio, and Pennsylvania. Return to text
5. 12 CFR 225.28(b)(4)(ii). Return to text
6. Id. Return to text
7. 12 CFR 225.28(b)(11). Return to text
8. 12 U.S.C. §1843(j)(2)(A). Return to text
9. See 12 CFR 225.26; see, e.g.,
BancOne Corporation, 83 Federal Reserve
Bulletin 602 (1997). Return to text
10. 12 U.S.C. §2901 et seq. Return to text
11. See First Hawaiian, Inc., 79 Federal
Reserve Bulletin 966 (1993). Return to text
12. These banking markets and the effects of the proposal on the
concentration of banking resources in them are described in the
appendix. Return to text
13. Deposit and market-share data are as of June 30, 2006,
and reflect merger activity through July 5, 2007. The deposits of
thrift institutions are included at 50 percent, except as noted
below. The Board previously has indicated that thrift institutions have
become, or have the potential to become, significant competitors of
commercial banks. See, e.g., Midwest Financial Group,
75 Federal Reserve Bulletin 386 (1989); National City Corporation, 70 Federal Reserve
Bulletin 743 (1984). Thus, the Board regularly has included
thrift institution deposits in the market-share calculation on a
50 percent weighted basis. See, e.g., First Hawaiian,
Inc., 77 Federal Reserve Bulletin 52 (1991).
In this case, Mid America's deposits are weighted at 50 percent
pre-merger and at 100 percent post-merger to reflect the
resulting ownership by a commercial banking organization. Return to text
14. Under the DOJ Guidelines, a market is considered
unconcentrated if the post-merger HHI is under 1000, moderately
concentrated if the post-merger HHI is between 1000 and 1800, and
highly concentrated if the post-merger HHI exceeds 1800. The Department
of Justice ("DOJ") has informed the Board that a bank merger or
acquisition generally will not be challenged (in the absence of other
factors indicating anticompetitive effects) unless the post merger HHI
is at least 1800 and the merger increases the HHI more than 200 points.
The DOJ has stated that the higher than normal HHI thresholds for
screening bank mergers and acquisitions for anticompetitive effects
implicitly recognize the competitive effects of limited purpose and
other nondepository financial entities. Return to text
15. 12 U.S.C. §2903. Return to text
16. 12 U.S.C. §2801 et seq. Return to text
17. As the commenter acknowledges, National City Bank operates
no branches in the Milwaukee area. The Milwaukee area, therefore, is
not part of the bank's assessment areas for purposes of evaluating its
CRA performance. Return to text
18. The commenter also requested that National City and Mid
America commit to implement a number of the commenter's
recommendations. The Board has consistently found that neither the CRA
nor the federal banking agencies' CRA regulations require depository
institutions to make pledges or enter into commitments or agreements
with any organization. See, e.g., Bank of America
Corporation, 93 Federal Reserve Bulletin C52,
footnote 27 (2007). Instead, the Board focuses on the existing CRA
performance record of an applicant and the programs that an applicant
has in place to serve the credit needs of its assessment areas at the
time the Board reviews the proposed acquisition of an insured
depository institution. Return to text
19. See Interagency Questions and Answers Regarding
Community Reinvestment, 66 Federal Register 36,620 at 36,640 (2001). Return to text
20. The evaluation periods were October 1, 1999, through
December 31, 2004, for the lending test; and February 23,
2000, through June 30, 2005, for the service and investment
tests. The NC Evaluation included the activities within National City
Bank's assessment areas of five affiliated banks that were consolidated
into National City Bank in July 2006 and of three nonbank mortgage
lending subsidiaries of National City. Return to text
21. "Small loans to businesses" are loans with original
amounts of $1 million or less that are either secured by nonfarm,
nonresidential properties or classified as commercial and industrial
loans. Return to text
22. The evaluation periods were January 1, 2003, through
December 31, 2005, for the lending test; and July 1, 2002,
through June 30, 2005, for the service and investment tests.
Full-scope evaluations were conducted in the Chicago-Naperville-Joliet
Metropolitan Statistical Area ("MSA") in Illinois, and in the
Milwaukee-Waukesha MSA in Wisconsin. Limited-scope evaluations were
conducted in other areas in Wisconsin. Return to text
23. Beginning January 1, 2004, the HMDA data required to
be reported by lenders were expanded to include pricing information for
loans on which the annual percentage rate (APR) exceeds the yield for
U.S. Treasury securities of comparable maturity 3 or more percentage
points for first-lien mortgages and 5 or more percentage points for
second-lien mortgages (12 CFR 203.4). Return to text
24. The data, for example, does not account for the possibility
that an institution's outreach efforts may attract a larger proportion
of marginally qualified applicants than other institutions attract and
do not provide a basis for an independent assessment of whether an
applicant who was denied credit was, in fact, creditworthy. In
addition, credit history problems, excessive debt levels relative to
income, and high loan amounts relative to the value of the real estate
collateral (reasons most frequently cited for a credit denial or higher
credit cost) are not available from HMDA data. Return to text
25. 12 CFR 225.7 and 225.25(c). Return to text
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