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New Credit Accessibility Measure Weighs Lender Risk

The Housing
Finance Policy Center, part of the Urban Institute, has released a new measure of
credit availability
.  In an article in
the Urban Institute’s blog, Metro Blog, Wei Li and Laurie
Goodman talk about the initial findings from their measure, the Credit
Availability Index or HCAI, that product not borrower risk fueled the housing
bubble. 

We will return to those findings later, but first an explanation of how the
Index is calculated
and, more interestingly, how the authors compare it to others that
attempt to measure credit accessibility; the
Federal Reserve’s Senior Loan Officer
Opinion Survey on Bank Lending
Practices (SLO),  mortgage application denial     rates based on annual Home Mortgage
Disclosure Act (HMDA) data; the Mortgage
Credit Availability Index
produced by the Mortgage
Bankers Association (MBA), and median
borrower’s credit score
at origination.  Li and Goodman claim these measures suffer
variously from being too narrow, too subjective, limited in time, opaque, or
inaccurate in certain situations.

 

…(read more)

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