Black, Low-Income & Nonbank Mortgage Shares Rise

written by
5 · 07 · 18

A summary of data for last year collected as required by the Home Mortgage Disclosure Act shows that a bigger share of loans went to black and low-income borrowers as non-banks did more of the lending.

Last year, there were
5,852 banks, savings associations, credit unions and non-bank mortgage companies that reported HMDA data, 13 percent fewer than in the preceding year.

The decline was attributed to changes in
Regulation C requiring HMDA collection and reporting from depository institutions only if they originated 25 or more purchase-money loans or refinances of purchase mortgages in each of the two preceding years.

The Consumer Financial Protection Bureau released a summary of the data, which was reported Monday by the Federal Financial Institutions Examination Council.

Data reported include information about
loan applications, originations and denials. Also reported was data about the purchases of loans, sales of loans and other actions related to applications.

Non-bank home lenders generated 56.1 percent of first-lien purchase-money loans last year, growing from 53.3 percent in 2016 — “the first year in which independent mortgage companies made the majority of such loans since at least 1995.”

The 12.1 million mortgage applications tracked in the 2017 report resulted in 7.3 new loans closed and 2.1 million loans that were purchased.

Between 2016 and 2017, loan originations were down by about 1 million transactions. That worked out to a 12.4
percent decline. Although purchase financing transactions were up more than 4 percent, refinances sank by one-third.

The share of first-lien loans used to finance a home purchase to borrowers with low-to-moderate income widened to 26.3 percent from 26.2 percent in 2016.

Black borrower purchase-money share was more broad at 6.4 percent in 2017 versus 6.0 percent a year earlier, while Asian share of the home finance market inched up to 5.8 percent from 5.5 percent. At 8.8 percent, there was no change in the Hispanic-white share.

FHA share of the purchase financing market thinned to 22.6 percent from a quarter in 2016, while VA share was steady at a 10th.
Overall government share, including USDA and FSA loans, fell to 36.3 percent from 38.7 percent.

Preapprovals numbered 481,000 in 2017.

Higher-priced loans — first liens priced 150 basis points higher
than average prime offer rates — made up 6.9 percent of last year’s production. The share widened from 5.5 percent in 2016.

According to the bureau, the data will be updated on an ongoing basis to reflect late submissions and resubmissions — a break from the static reports of the past.

Mortgage Expert

Mortgage Daily Staff