Mortgage lending data shows loans exempted under reg relief law have high rate of approval

Nearly 60% of applications for home loans were approved by financial institutions and other lenders in 2018, but those loans exempted from certain reporting under last year’s regulatory relief legislation saw an origination rate of nearly 75%, according to figures published Tuesday by federal regulators.

According to the Home Mortgage Disclosure Act (HMDA) mortgage lending data published by the Federal Financial Institutions Examination Council (FFIEC), the umbrella group for regulators, loans that fell under the partial exemptions of the 2018 Economic Growth, Regulatory Relief and Consumer Protection Act (EGRRCPA, S. 2155) made up less than 3% of total loan applications (and 3.7% of total loan originations). That partial exemption does not require the lender to report if the loan was open- or closed-ended.

However, those loans were overwhelmingly approved (or originated), at a rate of three for every four applications made (74.9%). By contrast, 61% of closed-end loans applied for were approved and just under 48% of open-end loans applied for were given the green light.

Closed-end loans still accounted for most loans approved, for 82% of the 7.7 million loans OK’d in 2018; open-end loans accounted for only 14.3% of all loans approved. The partial-exempted loans accounted for about 3.7% of all loans originated.

Overall, the HMDA report stated that, in 2018, just under 13 million loan applications were submitted; 7.7 million loans were ultimately originated (about 59% of loan applications made).

The HMDA report noted that the number of reporting institutions declined by about 2.9% in 2018 from the previous year to 5,683, and that the total originated loans decreased by about 924,000 between 2017 and 2018, or 12.6%. Refinance originations decreased by 23.1% from 2.5 million, and home purchase lending increased by 0.3% from 4.3 million.

FFIEC Announces Availability of 2018 Data on Mortgage Lending