OBSERVATION REGARDING THE 2020 HMDA DATA

Posted on by jholzknecht

On June 17, 2021 the Federal Financial Institutions Examination Council (FFIEC) published 2020 HMDA data. The data is always a treasure trove. The following are a few quick observations about the data.

  • For 2020, the number of reporting institutions declined by about 18.8 percent from the previous year to 4,475.
    • One reason for the change is that, in 2020, the Bureau issued a final rule amending Regulation C to increase the threshold for collecting and reporting data about closed-end mortgage loans from 25 to 100 loans, effective July 1, 2020.
  • The 2020 data include information on 22.7 million home loan applications.
    • Among them, 20.4 million were closed-end, 1.7 million were open-end, and, for another 563,000 records, pursuant to the EGRRCPA’s partial exemptions, financial institutions did not indicate whether the records were closed-end or open-end.
    • The number of closed-end loan applications increased by 63.2 percent, and the number of open-end line of credit applications decreased by 19.0 percent.
    • A total of 14.5 million applications resulted in loan originations. Among them, 13.2 million were closed-end mortgage originations, 906,000 were open-end line of credit originations, and, pursuant to the EGRRCPA’s partial exemptions, 432,000 were originations for which financial institutions did not indicate whether they were closed-end or open-end.
    • The 2020 data include 2.8 million purchased loans, for a total of 25.6 million records. The total also includes information on approximately 129,000 preapproval requests that were denied or approved but not accepted.
  • The total number of originated closed-end loans increased by about 5.3 million between 2019 and 2020, or 67.1 percent. 
    • Refinance originations for 1-4 family properties increased by 150.0 percent from 3.4 million.
    • Home purchase lending increased by 6.7 percent from 4.5 million.
  • A total of 1,637 reporters made use of the EGRRCPA’s partial exemptions for at least one of the 26 data points eligible for the exemptions. In all, they account for about 589,000 records and 439,000 originations.
  • From 2019 to 2020, the share of:
    • Home purchase loans for first lien, 1-4 family, site-built, owner-occupied properties made to low- or moderate-income borrowers (those with income of less than 80 percent of area median income) increased slightly from 28.6 percent to 30.4 percent; and
    • Refinance loans to low- and moderate-income borrowers for first lien, 1-4 family, site-built, owner-occupied properties decreased from 23.8 percent to 19.3 percent.
  • In terms of borrower race and ethnicity, the share of home purchase loans for first lien, 1-4 family, site-built, owner-occupied properties made to:
    • Black borrowers rose from 7.0 percent in 2019 to 7.3 percent in 2020,
    • Hispanic-White borrowers decreased slightly from 9.2 percent to 9.1 percent, and
    • Asian borrowers decreased from 5.7 percent to 5.5 percent.
  • From 2019 to 2020, the share of refinance loans for first lien, 1-4 family, site-built, owner-occupied properties made to:
    • Black borrowers decreased from 5.3 percent to 4.3 percent,
    • Hispanic-White borrowers decreased from 6.2 percent to 5.3 percent, and
    • Asian borrowers increased from 5.4 percent to 6.7 percent.
  • In 2020, denial rates for first lien, 1-4 family, site-built, owner-occupied conventional home purchase loans for
    • Black applicants were 17.2 percent;
    • Hispanic-White applicants were 11.2 percent;
    • Asian applicants were 9.1 percent; and
    • Non-Hispanic-White applicants were 6.1 percent.
  • The share of first-lien home purchase loans for 1-4 family, site-built, owner-occupied properties originated by the:
    • Federal Housing Administration (FHA)-insured decreased slightly from 20.2 percent in 2019 to 19.5 percent in 2020.
    • Department of Veterans Affairs (VA)-guaranteed share of such loans decreased slightly to 10.4 percent in 2020.
    • Overall government-backed share of such home purchase loans, including FHA, VA, Rural Housing Service, and Farm Service Agency loans, was 32.9 percent in 2020, down from 33.4 percent in 2019.
  • The share of refinance mortgages for first lien, 1-4 family, site-built, owner-occupied properties originated by the:
    • FHA-insured decreased to 6.6 percent in 2020 from 12.0 percent in 2019;
    • VA-guaranteed decreased from 13.5 percent in 2019 to 11.9 percent in 2020.
  • The share of mortgages originated by non-depository, independent mortgage companies has increased in recent years.
    • In 2020, this group of lenders accounted for 60.7 percent of first lien, 1-4 family, site-built, owner-occupied home-purchase loans, up from 56.4 percent in 2019.
    • Independent mortgage companies also originated 63.3 percent of first lien, 1-4 family, site-built, owner-occupied refinance loans, an increase from 58.1 percent in 2019.
  • The HMDA data also identify loans that are covered by the Home Ownership and Equity Protection Act (HOEPA). Under HOEPA, certain types of mortgage loans that have interest rates or total points and fees above specified levels are subject to certain requirements, such as additional disclosures to consumers, and also are subject to various restrictions on loan terms.
    • For 2020, 6,682 loan originations covered by HOEPA were reported: 2,915 home purchase loans for 1-4 family properties; 369 home improvement loans for 1-4 family properties; and 3,398 refinance loans for 1-4 family properties.