Race now required for mortgage modification?

UPDATE: After going through several HUD documents and mortgage applications, it appears that the National Review article is incorrect. I will have to do more research, but the requirement for the lender to provide a race/ethnicity even if the applicant specifically does not provide or refuses to provide that information is not new. While the language on the form provided to applicants says that collecting racial information is “voluntary”, the instructions for the processor is to collect that information by observation regardless. The insidious nature of this practice doesn’t change, but it isn’t new. Corrections below, updates will be forth coming.

Thanks to the folks over at National Review for spilling the beans on this travesty reminding us how HUD works in a piece titled Racial Voyeurism, by Matthew Shaffer. we learn that our famously post racial President just can’t move beyond matters of race. Even though most Americans don’t care about race, our current government can only be described as “obsessed” with it. The latest fiasco is the Home Affordable Modification Program (HAMP) which requires lenders to identify the race of the applicant even if the applicant refuses to provide the information. The handbook for the HAMP program specifically states;

“If a borrower declines to provide GMD, the servicer should attempt to provide the information based on visual observation, information learned from the borrower or surname.”

This program’s invasion of privacy and the circumvention of a person’s preference to not reveal their race is positively Orwellian. Anyone that believes that they are an American first ( like the outspoken Lloyd Marcus), and ethnicity comes second and is nobody’s business, will find this particularly insulting. More pointedly, just how are surnames supposed to be used to determine ethnicity unless the lender applies stereotyping? Isn’t stereotyping bad?


The only reason to collect race based information is to do one of 2 things; judge lenders on the race of their lendees, or judge mortgage qualifications based on race. The NRO article points out the obvious;

And there’s a disturbing potential trap. The Justice Department has promised to monitor servicers for discrimination closely using the data coming from HAMP. But according to Natarelli, in practice, “lenders exercise little, if any, discretion under the HAMP program.” They are strictly subject to the Treasury’s narrow (and race-neutral) guidelines. But the Obama administration still anticipates bias — and is always and everywhere eager to find it, as we see in its application of disparate-impact theory.


This policy for HAMP may or may not contradicts prior policies. When HUD recently added new ethnic requirements to reporting it reminded all that;

Self-reporting or self-identification, rather than observer identification, is the preferred method for collecting race and ethnicity data. Self-identification for race and ethnicity means that responses are based on self-perception.”


Yet at the same time, section X of the standard Fannie Mae form 1033 explicitly states

When an application is taken in person and an applicant elects not to provide some or all of this information, federal law requires the lender to note the applicant’s sex, ethnicity, and race on the form, based on the lender’s visual observation or the applicant’s surname


In summation, the Obama administration and Justice department HUD doesn’t care what your self perception is, ESPECIALLY if it’s non racial.


The HAMP program was designed to help people that are at risk of losing their home. So far it has not had nearly the success that was promised and it’s being may be used by a biased Justice Department to go trolling. They are on the lookout for bias and determined to find it. Any attempt to not have your race identified will be circumvented by a bureaucrat, in the name of fairness and justice. That hardly seems fair or just.


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