Government-insured loans accounted for a smaller share of overall originations last year, but dependence on the federal mortgage program remained elevated on historical terms. The number of fundings was lower, and refinances took a bigger hit than purchase financing. Black and Hispanic borrowers continue to see higher denial rates than their white and Asian counterparts.
U.S. mortgage lenders took 11.7 home-loan applications during 2011. Nearly 7.1 million loans were funded from those applications.
Overall originations were down around 10 percent from 2010 by approximately 780,000 units. The decline reflected a 13 percent drop in refinance activity and a 5 percent retreat in home purchase financing.
The report reflects 2011 Home Mortgage Disclosure Act data from 7,632 banks, savings associations, credit unions and mortgage companies. The number of participating financial institutions fell 4 percent from 2010 and has been on a downward trend since 2006, when HMDA coverage included more than 8,900 lenders.
The Federal Financial Institutions Examination Council prepares and distributes the HMDA data on behalf of its member agencies including the Board of Governors of the Federal Reserve System, Consumer Financial Protection Bureau, Department of Housing and Urban Development, Federal Deposit Insurance Corp., National Credit Union Administration and Office of the Comptroller of the Currency.
The FFIEC said that 186,000 requests for mortgage pre-approvals did not result in a closed loan.
Home purchases financed with first liens insured by the Federal Housing Administration accounted for 31 percent of 2011 activity, off from 36 percent the prior year. But FHA share is still elevated on historical terms and has grown considerably from 7 percent in 2007.
Mortgages guaranteed by the Department of Veterans Affairs accounted for 8 percent of last year’s business, higher than 7 percent in 2010.
Just a “small minority” — or less than 4 percent — of 2011 first liens were considered higher-priced. Loans are considered higher priced if the annual percentage rate exceeds rates published by Freddie Mac by at least 150 basis points.
But on manufactured housing first liens, 82 percent of loans were considered higher priced.
“Regarding the disposition of applications for conventional home-purchase loans in 2011, black and Hispanic white applicants experienced higher denial rates than non-Hispanic white applicants,” the report stated. “The denial rate for Asian applicants was virtually the same as the corresponding denial rate for non-Hispanic white applicants. These relationships are similar to those found in earlier years.”