Since 2006, Econsult Solutions, Inc. (ESI) has been retained by the City of Philadelphia to conduct an annual Fair Lending Analysis of the city’s authorized depositories. The study is designed to analyze whether the city’s depositories provide financial products and services in a fair and unbiased manner to the citizens of Philadelphia, in accordance with Philadelphia City Council’s Resolution No. 051161.
The fair lending study ranked the authorized depositories based on a statistical analysis of their lending practices in the Philadelphia area. The Office of the City Treasurer utilizes these rankings to monitor the performance of the depositories’ fair lending practices. The study is an important component of safeguarding the public interest in identifying and rectifying instances of predatory and biased lending practices.
The study analyzed the denial rates and loan terms (prime versus subprime) across the following categories: loan type (home purchase, home improvement, home refinance), race (White, African-American, Asian, Hispanic), income (as a percentage of the average MSA income) and gender. A similar analysis is conducted for small business lending practices in Philadelphia. Using data primarily from the final ranking of Home Mortgage Disclosure Act (HMDA), ESI creates a composite score based on depository prime home purchase lending performance by race and income. Depositories that originated loans above the citywide lender average received a more positive score than those that did not.
Each year, ESI highlights the loan types and groups that are more likely to be discriminated against, in addition to identifying if any depositories are engaging in redlining practices. These findings are then compared to the findings from prior years to determine if the discriminatory lending practices are improving or worsening in Philadelphia.