Recently, the Urban Institute held a discussion on 2014 Home Mortgage Disclosure Act (HMDA) data. Neil Bhutta shared findings from the Federal Reserve Board of Governors’ analysis of the data; Core Logic provided a review of 2015 data they have been collecting, and Bing Bai shared the Urban Institute’s new interactive map of HMDA data. The presentations highlighted a number of interesting developments in mortgage lending and showed that while the crisis is over, mortgage lending remains in flux, adjusting to the post-crisis landscape. Purchase lending, while increasing, is still relatively low. The mix of entities providing mortgage lending is different, and as the Urban Institute’s maps indicate, minority households are struggling to access mortgage credit and join the housing recovery.
- According to the Federal Reserve analysis, 2014 HMDA shows that non depository institutions or independent mortgage companies (IMCs) are doing more mortgage lending, at 40 percent of total mortgage lending, a historically high level. Western states are relying most heavily on IMCs, anywhere from 59-75 percent of mortgage lending in those states. Large banks were 36 percent of mortgage lending activity; small banks and credit unions were each nine percent of mortgage lending in 2014.
- Bhutta raised this point and discussed how the housing finance system may be becoming more reliant on less regulated and potentially less financially robust institutions.
- Independent mortgage companies are not covered by the Community Reinvestment Act. This lack of coverage may be significant when we’re concerned about outcomes for low and moderate income borrowers. Federal Reserve research has found that CRA related loans to low and moderate income borrowers outperform non-CRA loans.
- Bhutta also discussed how mortgage loans from IMCs may be more expensive for consumers than getting a mortgage loan from other types of providers, but that 2014 data did not clearly establish this idea.
- Urban Institute has released an interactive map which visualizes 14 years of HMDA data throughout the country. The map provides striking illustrations of mortgage lending trends pre and post crisis in metropolitan areas.
- While still high, minority homebuyers’ use of Federal Housing Administration (FHA) lending products continued to decline in 2014. However, overall minority shares of purchase loans started to slightly trend upward for the first time in a number of years.
- The ability to repay (ATR) and qualified mortgage (QM) rules went into effect in 2014, but the Federal Reserve’s analysis did not find a disproportionate impact of those rules on lending activity.