The 2017 Home Mortgage Disclosure Act Loan Application Register is public - four months earlier than usual! Do you know what the public HMDA LAR data says about you? Here are 3 mortgage lending trends to watch in 2018.
As promised, the Consumer Financial Protection Bureau (CFPB) and the Federal Financial Institutions Examination Council (FFIEC) have shattered expectations and released the 2017 HMDA LAR just two months after submission. If you're new to compliance, know that this data is usually released in mid-September. This year, they've released snapshots of the data much earlier in order to provide financial institutions and the public access to insights sooner.
Please Note: If you're a HMDA Analytics customer, you'll be happy to hear that the new data is uploaded in TRUPOINT Analytics and ready for you to use! If you have any questions, reach out to your TRUPOINT Customer Success Manager.
By releasing this data four months earlier than normal, the CFPB is making good on its promise to deliver a more digital, more efficient, and more data-focused approach to HMDA compliance.
Learn the three mortgage lending trends revealed by the CFPB's release of the 2017 HMDA data, and get a free post-HMDA submission checklist!
We've taken a look at the data, and have identified three top trends that we will be exploring more in the coming weeks. Let's jump right in:
1. The Total Number of HMDA LAR Records and the Number of Mortgage Loan Originations Both Decreased
The 2017 HMDA LAR shows only 14,285,496 records; the 2016 HMDA LAR included 16,332,987 records, according to the CFPB's interactive HMDA data exploration tool.
In addition, the number of originated mortgages fell in 2017 to 7,339,057 from 8,377,907 in 2016. This is a 13% decrease.
Of those originations, 4,254,982 were Home Purchase loans, 552,400 were Home Improvement loans, and 2,531,675 were Refinance loans.
Please note, some of that decline can be attributed to the fact that fewer institutions reported HMDA data from 2017, due in part to changes in Reg C that increased reporting thresholds.
2. More Higher Priced Loans Were Made in 2017
In 2016, there were 454,671 higher priced mortgage loans originated. Higher-priced loans are defined as ones with APRs that exceed the APOR by at least 1.5 percentage points for first-lien homes, and 3.5 percentage points for subordinate-lien loans.
In 2017, the number of higher-priced mortgage loans originated increased by approximately 8% to 493,273.
Home Purchase loans accounted for 381,841 of those higher-priced mortgage loan originations, Home Improvement loans for 26,053, and Refinance loans for 85,379.
Of those higher-priced mortgage loan originations:
- White borrowers received 377,244, or 76%.
- African-American borrowers received 58,340 or 11%.
- Asian borrowers received 14,134 or 3%.
- Hispanic or Latino borrowers received 90,744 or 18%.
- American Indian or Alaskan Native borrowers received 4,341 or less than 1%.
- Native Hawaiian or Pacific Islander borrowers received 2,074 or less than 1%.
To compare, of the 6,845,784 not higher-priced mortgage originations, white non-Hispanic borrowers received 66% (, African-American borrowers received 6%, Asian borrowers also received 6%, Hispanic or Latino borrowers received 9%, American Indian or Alaskan Native and Native Hawaiian or Pacific Islander both received less than 1%.
3. Independent Mortgage Bankers Continue to Increase Market Share
In 2017, independent mortgage bankers originated more than half of the Home Purchase loans originated. In 2017, there were 4,254,982 Home Purchase loans originated; HUD-regulated institutions were responsible for 2,293,552, or 53%, of them.
Credit Unions were responsible for originating 228,260 of those Home Purchase loans, or 5%, and banks for the remaining 42%.
This continues a trend that we've seen consistently over the past few years.
Expect More Data...
The FFIEC and CFPB have or will release even more HMDA-based data. These data sets include:
- Modified Individual Loan/Application Register (LAR)
- The modified LAR provides loan-level data for an individual financial institution, as modified by the Bureau to protect applicant and borrower privacy.
- Released March 30, 2018.
- Disclosure Reports
- These reports summarize lending activity for individual institutions, both nationwide and by MSA/MD.
- Coming Soon.
- MSA/MD Aggregate Reports
- These reports summarize lending activity by MSA/MD.
- Coming Soon.
- National Aggregate Reports
- These reports summarize nationwide lending activity. They indicate the number and dollar amounts of loan applications, cross-tabulated by loan, borrower and geographic characteristics.
- Coming Soon.
It's important to note that the CFPB estimates that only 49% of mortgage lenders report HMDA data, but that these reporting institutions do the majority of mortgage lending. As a result, the CFPB estimates that more than 90% of mortgage lending activity is accounted for in this HMDA LAR.
TRUPOINT Viewpoint: This year has brought change-after-change for HMDA compliance, and this speedy public HMDA release is part of that larger narrative.
As you work to achieve your HMDA compliance goals in 2018, make HMDA data analysis one of the first steps you take in your Fair Lending compliance management. Learn more about the 7 steps you need to take now that your 2017 HMDA has been filed, and the public HMDA LAR has been released.