Philadelphia’s Annual Fair Lending Analysis

Since 2006, Econsult Solutions, Inc. (ESI) has been retained with MFR Consultants, Inc. by the City of Philadelphia to conduct an Annual Fair Lending Analysis of the City’s authorized depositories of City funds. 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 City Council’s Resolution No. 051161.

The fair lending study provides a ranking of the authorized depositories based on a statistical analysis of their lending practices in the Philadelphia area. Specifically, the study examined Philadelphia’s fair lending practices of residential mortgage lending practices, prime and subprime home lending, home lending to non-owner-occupied borrowers, depositories and home lending, small business lending, and how the City compares to other areas. In other words, does the data indicate practices of racial or ethnic discrimination by all lenders and/or by City depositories? ESI then considers 1) denial rates by loan type, and 2) less-favorable lending terms (e.g. subprime versus prime loans).

With each report, ESI has provided the City of Philadelphia with the tools and information needed to provide oversight and accountability in the area of fair lending. ESI highlighted the loan types and groups that are more likely to be discriminated against, in addition to identifying if any depositories are engaging in unfair lending 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. These rankings will provide the City with guidance on the performance of these banks.