Black and Hispanic-white applicants experienced higher denial rates for conventional home purchase loans in 2016 than non-Hispanic white applicants, according to Home Mortgage Disclosure Act (HMDA) information released Thursday by federal regulators.The denial rate for Asian applicants, the report states, is more comparable to the denial rate for non-Hispanic white applicants.
According to the Federal Financial Institutions Examination Council (FFIEC), a coordinating group of federal financial institution regulators, the “relationships” in the 2016 report are similar to those found in earlier years. FFIEC added that the results “do not take into account potential differences in risk characteristics across demographic groups.”
However, the FFIEC report also shows that the share of home purchase loans for 1-4 family properties made to black borrowers rose from 5.2% in 2015 to 5.6% in 2016, that the share made to Hispanic-white borrowers rose from 7.9% to 8.4%, and the share made to Asian borrowers rose from 5.5% to 5.7%. The share of refinance loans made to black borrowers remained at 4.9% in 2016, the share made to Hispanic-white borrowers remained at 6.1%, and those made to Asian borrowers rose from 5.1% to 5.6%.
The HMDA data also show that from 2015 to 2016, the share of 1-4 family home purchase loans made to low- and moderate-income borrowers (those with income of less than 80% of area median income) fell from about 27% to roughly 25%, and the share of refinance loans to low- and moderate-income borrowers decreased from 22% to 19%.
HMDA data, FFIEC noted, help the public determine how financial institutions are serving the housing needs of their local communities and facilitate fair lending and compliance examinations. When examiners evaluate an institution’s fair lending risk, they analyze HMDA data in conjunction with other information and risk factors, in accordance with the Interagency Fair Lending Examination Procedures (IFLEP).
The 2016 report includes data on mortgage lending transactions at 6,762 U.S. financial institutions covered by HMDA, including banks, savings associations, credit unions, and mortgage companies. The data include lending activity related to:
- Applications, originations, purchases, sales of loans, denials, and other actions related to applications;
- Loan amounts;
- Loan types (conventional, Federal Housing Administration (FHA), Veterans Administration (VA), Rural Housing Service (RHS), or Farm Service Agency (FSA));
- Purposes (home purchase, home improvement, or refinancing);
- Property types (1—4 family, multifamily, or manufactured housing);
- Owner occupancy, and more.
FFIEC said the data also include disclosure statements for each financial institution, aggregate data for each metropolitan statistical area (MSA), nationwide summary statistics regarding lending patterns, and Loan/Application Registers (LARs) for each financial institution (LARs are modified to protect borrower privacy). The FFIEC prepares and distributes this information on behalf of its member agencies, which include the Federal Deposit Insurance Corporation (FDIC), Federal Reserve System, National Credit Union Administration (NCUA), Office of the Comptroller of the Currency (OCC), and Consumer Financial Protection Bureau (CFPB). The FFIEC’s State Liaison Committee (SLC), representing state financial regulators, also participates in the Council’s deliberations.
Other details reported by the FFIEC for 2016 included:
- The number of reporting institutions declined by about 2% from the previous year to 6,762. While there were some new reporters in 2016, the total was offset by the number of institutions that reported in 2015 but did not do so in 2016. In most cases, FFIEC said, this is because of mergers and acquisitions.
- Information on 13.9 million home loan applications, of which 8.4 million resulted in loan originations, and 2.2 million in purchased loans, for a total of more than 16.1 million actions. The data also include information on approximately 530,000 requests for preapprovals for home purchase loans.
- The total number of originated loans of all types and purposes increased by almost 1 million between 2015 and 2016, or 13%. Refinance originations increased by 16%, and home purchase lending increased by almost 11%.