Why do some mortgage servicers appear to be modifying a great many more loans than others? How many loans are getting principal reduced, rather than interest rate reductions? How many loans in a given neighborhood are more than 30 days late?
Answering such questions may be critical to craft effective policy responses to the housing crisis. But it's hard to get definitive answers, because data on mortgage performance is incomplete and often expensive.
Most of the detailed information on mortgage performance is gathered by two companies, CoreLogic and Lender Processing Services, and sold in various forms to regulators for sums that can reach hundreds of thousands of dollars for a particular data set.
Members of Congress, state banking regulators and academics say they have been regularly stymied in attempts to access the data. In many cases they cannot afford it. Sometimes regulators who have the data cannot share it because of proprietary arrangements with data providers.
But thanks to a little-discussed provision of the Dodd-Frank Act, legislators, regulators and even nonprofit housing activists may eventually get a more comprehensive picture of the mortgage servicing industry.
Section 1447 of the law calls for the Department of Housing and Urban Development (HUD) to establish and maintain a comprehensive national database on foreclosures and defaults on mortgages and to make the information publicly available. The data is supposed to drill down to the census tract level and include the number and percentage of loans that are delinquent by more than 30 days; those that are in the foreclosure process; and those that are underwater.
Proponents of the idea say such a database is long overdue. "There are no complete data sources and there is overreliance on third-party vendors," said Richard Neiman, former New York State banking commissioner and former member of the Congressional Oversight Panel for the Troubled Asset Relief Program (TARP), who submitted a proposal for such a database in 2009. "We as regulators and stakeholders should not be relying on third party vendors whose data is incomplete and subject to inaccuracies."
Neiman, who is expected to join PricewaterhouseCoopers as vice chairman of global regulatory practice, said the forthcoming database could be as valuable as the information collected under the Home Mortgage Disclosure Act (HMDA), which is used to evaluate possible discrimination in loan approvals. "Having a mortgage performance database would provide a similar window on mortgage servicing," he said. "Just like HMDA was used to identify violations in the origination process, a national mortgage database could provide a similar window on servicing and modifications."