March 14, 2018
The Importance of Mortgage Data
Senate Bill 2155 is looking like it will be enacted and reduce the amount of data collected pursuant to the Home Mortgage Disclosure Act. The Federal Reserve Bulletin includes a report that demonstrates just how useful that data is, Residential Mortgage Lending in 2016: Evidence from the Home Mortgage Disclosure Act Data. Key findings of the report include,
1. The number of mortgage originations in 2016 rose 13 percent, to 8.4 million from 7.4 million in 2015. For loans secured by one- to four-family properties, growth was strong in both home-purchase originations—which increased to 4.0 million from 3.7 million in 2015—and refinance originations—which increased to 3.8 million from 3.2 million in 2015.
2. Black and Hispanic white borrowers increased their share of home-purchase loans for one- to four-family, owner-occupied, site-built properties in 2016, the third consecutive annual rise for both groups. The HMDA data indicate that 6.0 percent of such loans went to black borrowers, up from 5.5 percent in 2015, while 8.8 percent went to Hispanic white borrowers, up from 8.3 percent in 2015. The share of home-purchase loans to low- or moderate-income (LMI) borrowers decreased to 26 percent in 2016 from 28 percent in 2015.
3. The average value of home-purchase loans rose 3.2 percent in 2016, to $257,000, with similar increases for loans made to borrowers of different racial and ethnic groups. The average value of home-purchase loans to Hispanic white borrowers remained well below the 2006 peak, while the averages for Asian, black, and non-Hispanic white borrowers were all above their 2006–07 peaks.
4. Black and Hispanic white borrowers continued to be much more likely to use nonconventional loans (that is, loans with mortgage insurance from the Federal Housing Administration (FHA) or guarantees from the Department of Veterans Affairs (VA), the Farm Service Agency (FSA), or the Rural Housing Service (RHS)) than conventional loans compared with other racial and ethnic groups. In 2016, among home-purchase borrowers, 69 percent of blacks and 60 percent of Hispanic whites took out a no-conventional loan, whereas about 35 percent of non-Hispanic whites and just 16 percent of Asians did so.
5. The share of mortgages originated by non-depository, independent mortgage companies has increased sharply in recent years. In 2016, this group of lenders accounted for 53 percent of first-lien owner-occupant home-purchase loans, up from 50 percent in 2015. Independent mortgage companies also originated 52 percent of first-lien owner–occupant refinance loans, an increase from 48 percent in 2015. For the first time since at least 1995, non-depository, independent mortgage companies accounted for a majority of each of these types of loans. (2-3)
It is important that HMDA data continue to provide a reliable overview of the mortgage market so that changes in the market can be identified and policies can be modified to respond to them. It remains to be seen just how much Senate Bill 2155 will reduce the usefulness of HMDA data. Time will tell.
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