New HMDA Data Shows Mortgage Market Continues to Exclude Black and Latino Borrowers
WASHINGTON, D.C. – RealEstateRama – The Federal Financial Institutions Examination Council (FFIEC) released its 2019 Home Mortgage Disclosure Act (HMDA) data this week, covering the vast majority of mortgages made in the United States in the past year. Like previous years, the data revealed that borrowers of color remain underserved in the conventional market.
Despite a modest increase in the share of home-purchase loans made to Black and Latino borrowers in 2019, these shares remain well below the population share they represent. The HMDA data also shows that the majority of home purchase loans made to Black and Latino borrowers were made through government insured programs such as Federal Housing Administration (FHA) loans, which tend to have higher costs attached. Furthermore, homeownership for Black and Latino borrowers disturbingly remains far behind white homeownership.
Center for Responsible Lending Executive Vice President Nikitra Bailey released the following statement:
Despite a small uptick in lending to Black and Latino borrowers, borrowers of color continue to struggle accessing credit in today’s mortgage market — a disturbing fact despite historically low-interest rates. Recent people-led protest to address today’s social injustices are rooted in our nation’s discriminatory federal housing policies. These practices caused families of color to accumulate less wealth and be more susceptible to abusive subprime lending that cost Black and Latino families $1 trillion in wealth. Sadly, the current COVID-19 health crisis is devastating families of color at a disproportionately higher rate than whites. By not creating cost-efficient homeownership opportunities for creditworthy borrowers of color, we are denying millions of Americans the opportunity to accumulate wealth, suppressing economic growth, and widening the racial wealth gap. Furthermore, much is missing from the data released. Although lenders must disclose new data points, many of these points are not currently disclosed in the data. Additionally, during this Administration, Congress and the Consumer Financial Protection Bureau have made legislative and regulatory changes to weaken HMDA reporting, resulting in decreased transparency, which undermines the purpose of HMDA. Failure to fully disclose this data makes it harder to comprehend the reasons for disparities in mortgage lending. The CFPB should release to the public the credit score data and other fields it is now collecting.
Highlights from the 2019 HMDA data include:
- The share of home-purchase loans made to Black and Latino borrowers in 2019 rose modestly, but remained well below the population share they compose. In 2019, Blacks received 7.0 percent of loans up from 6.7 percent in 2018; Latino borrowers received 9.2 percent up from 6.9 percent in 2018. These percentages fall far short of the share of the U.S populations that these groups represent. Blacks compose 13.4% and Latinos 18.3% of the total national population.
- The share of loans made to low and moderate-income borrowers rose slightly in 2019 to 28.6 percent from 28.1 percent. Although modestly higher than the share in 2018 the 2019 share was lower than it was from 2009 to 2012. In addition, the share of home purchase loans in low-to-moderate-income (LMI) neighborhoods declined slightly between 2018 and 2019 to 16.5%.
- Most home-purchase loans made to Black and Latino borrowers continued to be through government-insured programs (including FHA, VA, and others) and reliance on these programs continued. In 2019, 60.6 percent of loans to Black borrowers and 48.8 percent of loans to Latino borrowers were government-backed. These shares compare to just 29.7 percent of loans made to non- Latino white borrowers.
- The size of the loans increased with house prices across all borrowers, but the smallest average loan sizes were for Black borrowers at $243,000 and Latino borrowers at $249,000. These values are more than $11,000 higher than average loan sizes in 2018.
- Credit scores are currently collected through HMDA, yet this data is not being released to the public. The CFPB should make loan-level credit score data available to the public, as it will provide insight into the disparities noted above.
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