The Mortgage Market in 2011: Highlights from the Data Reported under the Home Mortgage Disclosure Act

Robert B. Avery, Neil Bhutta, Kenneth P. Brevoort, and Glenn B. Canner, of the Division of Research and Statistics, prepared this article. Nicholas W. Henning and Shira E. Stolarsky provided research assistance.

[Note: This article is forthcoming in the Federal Reserve Bulletin.]

Since 1976, most mortgage lending institutions with offices in metropolitan areas have been required under the Home Mortgage Disclosure Act of 1975 (HMDA) to disclose detailed information about their home-lending activity each year. The Congress intended that HMDA achieve its legislative objectives primarily through the force of public disclosure.1 These objectives include helping members of the public determine whether financial institutions are serving the housing needs of their local communities and treating borrowers and loan applicants fairly, providing information that could facilitate the efforts of public entities to distribute funds to local communities for the purpose of attracting private investment, and helping households decide where they may want to deposit their savings. The data have also proven to be valuable for research and are often used in public policy deliberations related to the mortgage market. The 2011 HMDA data consist of information reported by more than 7,600 home lenders, including all of the nations largest mortgage originators. Together, the home-purchase, refinance, and home-improvement loans reported represent the majority of home lending nationwide and thus are broadly representative of all such lending in the United States.2 The HMDA data include the disposition of each application for mortgage credit; the type, purpose, and characteristics of each home mortgage that lenders originate or purchase during the calendar year; the census-tract designations of the properties related to those loans; loan pricing
A brief history of HMDA is available at Federal Financial Institutions Examination Council, History of HMDA, webpage, www.ffiec.gov/hmda/history2.htm. 2 It is estimated that the HMDA data cover about 90 to 95 percent of Federal Housing Administration lending and between 75 and 85 percent of other first-lien home loans. See U.S. Department of Housing and Urban Development, Office of Policy Development and Research (2011), A Look at the FHAs Evolving Market Shares by Race and Ethnicity, U.S. Housing Market Conditions (May), pp. 612, www.huduser.org/portal/periodicals/ushmc/spring11/USHMC_1q11.pdf.
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Mortgage Market in 2011

information; personal demographic and other information about loan applicants, including their race or ethnicity and income; and information about loan sales.3 On July 21, 2011, rulemaking responsibility for HMDA was transferred from the Federal Reserve Board to the newly established Consumer Financial Protection Bureau.4 The Federal Financial Institutions Examination Council (FFIEC) continues to be responsible for collecting the HMDA data from reporting institutions and facilitating public access to the information.5 In September of each year, the FFIEC releases summary tables pertaining to lending activity from the previous calendar year for each reporting lender and aggregations of home-lending activity for each metropolitan statistical area (MSA) and for the nation as a whole.6 The FFIEC also makes available to the public a data file containing virtually all of the reported information for each lending institution.7 The main purpose of this article is to describe mortgage market activity in 2011 and in previous years based on the HMDA data.8 Our analysis yields several key findings:

A list of the items reported under HMDA for 2011 is provided in appendix A. The 2011 HMDA data reflect property locations using census-tract geographic boundaries as created for the 2000 decennial census. The 2012 HMDA data will use the census-tract boundaries as constructed for the 2010 decennial census. Thus, in this article, census-tract population and housing characteristics of census tracts reflect the geographies established for the 2000 census data. 4 For information about the Consumer Financial Protection Bureau, see www.consumerfinance.gov. 5 The FFIEC (www.ffiec.gov) was established by federal law in 1979 as an interagency body to prescribe uniform examination procedures, and to promote uniform supervision, among the federal agencies responsible for the examination and supervision of financial institutions. The member agencies are the Board of Governors of the Federal Reserve System, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, and representatives from state bank supervisory agencies. Under agreements with these agencies and the Department of Housing and Urban Development, the Federal Reserve Board collects and processes the HMDA data. 6 For the 2011 data, the FFIEC prepared and made available to the public 48,347 MSA-specific HMDA reports on behalf of reporting institutions. The FFIEC also makes available to the public similar reports about private mortgage insurance (PMI) activity. The costs incurred by the FFIEC to process the annual PMI data and make reports available to the public are borne by the PMI industry. All of the HMDA and PMI reports are available on the FFIECs reports website at www.ffiec.gov/reports.htm. The designation of MSAs is not static. From time to time, the Office of Management and Budget updates the list and geographic scope of metropolitan and micropolitan statistical areas. See Office of Management and Budget, Statistical Programs and Standards, webpage, www.whitehouse.gov/omb/inforeg_statpolicy. 7 The only reported items not included in the data made available to the public are the loan application number, the date of the application, and the date on which action was taken on the application. 8 Some lenders file amended HMDA reports, which are not reflected in the initial public data release. A final HMDA data set reflecting these changes is created two years following the initial data release. The data used to prepare this article are drawn from the initial public release for 2011 and from the final HMDA data set for years prior to that. Consequently, numbers in this article for the years 2010 and earlier may differ somewhat from numbers calculated from the initial public release files.

Mortgage Market in 2011

The number of home loans of all types reported by covered lenders declined between 2010 and 2011 from about 7.9 million loans to nearly 7.1 million loans. Refinance loans fell more than home-purchase loans, although refinancings surged toward the end of 2011 as interest rates dropped. The total of 7.1 million loans reported in 2011 is the lowest number of loans reported in the HMDA data since 6.2 million in 1995.

Government-backed loans originated under programs such as the Federal Housing Administration (FHA) mortgage insurance program and the Department of Veterans Affairs (VA) loan guarantee program accounted for a slightly smaller share of homepurchase loans in 2011 relative to 2010 but continue to make up a historically large part of the owner-occupant home-purchase mortgage market at nearly 50 percent.

Despite the surge in the government-backed share of home purchase loans, which historically have gone to borrowers with relatively low credit scores, analysis of credit record data indicate that credit scores of home-purchase borrowers are considerably higher now than at any point in the past 12 years. The median score of such borrowers has risen about 40 points since the end of 2006, and the 10th-percentile score is up by about 50 points.

The HMDA data indicate that, at the retail level, the mortgage market has not become much more concentrated over the past five years. The 10 most active lending organizations accounted for about 37 percent of all first-lien mortgage originations in 2011, only slightly higher than the 35 percent share for the top 10 organizations in 2006.

Consistent with the overall decline in home-purchase and refinance lending, the HMDA data show that from 2010 to 2011, all income and racial or ethnic groups experienced a drop in home-purchase lending, although the extent of the decline varied some across groups. Only low-income borrowers avoided a fall in refinance lending.

The HMDA data suggest that lending activity has not yet rebounded in neighborhoods experiencing high levels of distress. In fact, home-purchase lending in census tracts identified by the Neighborhood Stabilization Program (NSP) as being highly distressed declined by a larger percentage since 2010 than less-distressed tracts. This decline was particularly pronounced for lower- and middle-income borrowers.

The incidence of higher-priced lending across all products in 2011 was about 3.7 percent, up from 3.2 percent in 2010. As in the past, black and Hispanic-white borrowers were 3

Mortgage Market in 2011

more likely, and Asian borrowers less likely, to obtain higher-priced loans than were nonHispanic white borrowers. These differences are significantly reduced, but not completely eliminated, after controlling for lender and borrower characteristics. Overall, loan denial rates in 2011 remained virtually unchanged from 2010 at about 23 percent of all loans. Denial rates vary across loan types and purposes, and across applicants grouped by race or ethnicity, as in past years. The HMDA data do not include sufficient information to determine the extent to which these differences reflect illegal discrimination. Comparing home-purchase borrower incomes reported in the HDMA data with income reported by homebuyers in household surveys suggests that incomes on mortgage applications were likely significantly overstated during the peak of the housing boom. In more recent years, there is no evidence of overstated incomes. The change from using data from the 2000 decennial census to using data from the 2010 census and the 200610 American Community Survey (ACS) as the basis for deriving median family income will affect how banking institutions will fare in Community Reinvestment Act (CRA) performance evaluations. Had the new census-tract relativeincome classifications been used in 2011, there would have been a net increase in mortgage lending to low- and moderate-income (LMI) neighborhoods of about 150,000 loans, about 22 percent higher than the number of LMI loans in 2011 under current census-tract relative-income classifications.

A PROFILE OF THE 2011 HMDA DATA For 2011, 7,632 institutions reported on their home-lending activity under HMDA: 4,497 banking institutions; 2,017 credit unions; and 1,118 mortgage companies, 812 of which were not affiliated with a banking institution (these companies are referred to in this article as independent mortgage companies) (table 1). The number of reporting institutions changes some from year to year. Some of the fluctuation is due to changes in reporting requirements, primarily related to increases in the minimum asset level used to determine coverage.9 Mergers,
For the 2012 reporting year (covering lending in 2011), the minimum asset size for purposes of coverage was $40 million. The minimum asset size changes from year to year with changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers. See the FFIECs guide to HMDA reporting at www.ffiec.gov/hmda/guide.htm.
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Mortgage Market in 2011

acquisitions, and failures also account for some of the year-over-year changes. Finally, periodic changes in the number and geographic footprints of metropolitan areas influence reporting over time, as HMDAs coverage is limited to institutions that have at least one office in an MSA. For 2011, the number of reporting institutions fell nearly 4 percent from 2010, continuing a downward trend since 2006, when HMDA coverage included just over 8,900 lenders.10

Reporting Institutions by Size and Mortgage Lending Activity Most institutions covered by HMDA are small, and most extend relatively few loans. For 2011, 57 percent of the depository institutions (banking institutions and credit unions) covered by HMDA had assets under $250 million, and 76 percent of them reported information on fewer than 100 loans (data derived from table 2). Among all depository institutions, nearly 55 percent reported on fewer than 100 loans. Across different types of lenders, mortgage companies tend to originate larger numbers of loans on a per-reporter basis than the other institutions (38 percent of the mortgage companies reported more than 1,000 loans, a share equal to about six times that for depository institutions). In the aggregate, reporting institutions submitted information on 11.7 million applications for home loans of all types in 2011 (excluding requests for preapproval), down about 10 percent from the total reported for 2010 and far below the 27.5 million applications processed in 2006, just before the housing market decline (data derived from table 3.A). The majority of loan applications are approved by lenders, and most of these approvals result in extensions of credit. In some cases, an application is approved, but the applicant decides not to take out the loan; for example, in 2011, about 5 percent of all applications were approved but not accepted by the applicant (data not shown in tables). Overall, about 60 percent of the applications submitted in 2011 resulted in an extension of credit (data derived from tables 3.A and 3.B), a share little changed from 2010. The total number of loans reported in 2011, 7.1 million (as shown in table 3.B), was about 10 percent lower than in 2010 and is the lowest number of mortgage loans reported under HMDA since about 6.2 million loans were reported in 1995 (data prior to 2000 not shown in tables).

There were 138 institutions that ceased operations and did not report lending activity for 2011, but these nonreporting companies accounted for only 0.89 percent of the 2010 loan application records submitted under HMDA.

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Mortgage Market in 2011

The HMDA data also include information on loans purchased by reporting institutions during the reporting year, although the purchased loans may have been originated at any point in time. For 2011, lenders reported information on 2.9 million loans that they had purchased from other institutions, a decline of nearly 9 percent from 2010. Finally, lenders reported on roughly 186,000 requests for preapproval of home-purchase loans that did not result in a loan origination (table 3.A); preapprovals that resulted in loans are included in the count of loan extensions cited earlier.

Home-Purchase and Refinance Lending In June 2006, the peak month for home-purchase lending that year, nearly 712,000 homepurchase loans were extended, compared with only 254,000 such loans in June 2011, the most active month that year (figure 1).11 On an annual basis, the number of home-purchase loans (including both first and junior liens) reported in HMDA in 2011 was down about 5 percent from 2010, and was 64 percent lower than in 2006 (data derived from table 3.B). One factor that may help explain the drop in home purchase lending between 2010 and 2011 is the ending of the first-time homebuyer tax credit program in April, 2010. 12 The firsttime homebuyer tax credit program likely stimulated homebuying in the first half of 2010 as individuals sought to purchase their homes before the sunset date.13 Data from the National Association of Realtors (NAR) support this view: The NAR annual survey of home buyers and sellers indicates that first-time homebuyers accounted for about 47 percent of all home purchases in 2009 and half of the home sales in 2010 before falling to a 37 percent share in 2011.14

Lenders report the date on which they took action on an application. For originations, the action date is the closing date or date of origination for the loan. This date is used to compile data at the monthly level. Generally, the interest rate on a loan is set at an earlier point known as the lock date. The interest rate series in the figure is constructed from the results of a survey of interest rates being offered by lenders to prime borrowers. Since a loans pricing likely reflects the interest rate available at the time of the lock date, the timing of the loan volume and interest rate series may be slightly misaligned in the figure. 12 Those entering into binding contracts to purchase their homes by April 30, 2010 were eligible for the tax credit. For more information, see Internal Revenue Service, First-Time Homebuyer Credit, webpage, www.irs.gov/newsroom/article/0,,id=204671,00.html. 13 Our analysis in an earlier article suggested that one-half of the home-purchase loans in 2009 qualified under the first-time homebuyer tax credit program. See Robert B. Avery, Neil Bhutta, Kenneth P. Brevoort, Christa Gibbs and Glenn B. Canner (2010), The 2009 HMDA Data: The Mortgage Market in a Time of Low Interest Rates and Economic Distress, Federal Reserve Bulletin, vol. 96, pp. A39A77. 14 See National Association of Realtors (2011), NAR Home Buyer and Seller Survey Reflects Tight Credit Conditions, news release, November 11, www.realtor.org/news-releases/2011/11/nar-home-buyer-and-sellersurvey-reflects-tight-credit-conditions.

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Mortgage Market in 2011

To a greater extent than for home-purchase borrowing, the volume of refinance lending over time generally follows the path of interest rates (typically with a fairly short lag), expanding as mortgage rates fall and retrenching when rates rise. The interest rate environment over the past few years has generally been quite favorable for well-qualified borrowers who have sought to refinance. In some cases, the same individuals have refinanced on more than one occasion to take advantage of the declining interest rate environment. However, many other individuals with outstanding loans have not been able to refinance, either because they could not meet incomerelated or credit-history-related underwriting standards or because of collateral-related issues, including situations where the outstanding balance on the loan exceeds the home value.15 Compared with 2010, the number of reported refinance loans in 2011 was down about 13 percent (table 3.B). Although the total volume of refinancing in 2011 was down quite a bit from 2010, lenders experienced much higher demand in some months than others. In 2011, the peak month for refinance issuance was November with nearly 504,000 loans, compared with only 230,000 loans in May (figure 1). The upsurge in refinance activity toward the end of 2011 reflects the steady drop in mortgage rates over the course of the year, which, by November and December, saw annual percentage offer rates on 30-year fixed-rate loans dip to about 4 percent.

Non-Owner-Occupant Lending Individuals buying homes either for investment purposes or as second or vacation homes are an important segment of the housing market in general, and in some areas of the country, they are particularly important. In the current period of high foreclosures and elevated levels of short sales, investor activity helps reduce the overhang of unsold and foreclosed properties. In some cases, investors or second-home buyers are able to purchase their properties for cash; in other cases, they choose to borrow and finance their purchase. Surveys sponsored by the NAR find that in 2011, about half of investors paid cash for their purchases and 42 percent of vacationhome buyers paid cash for their properties.16 The HMDA data help document the role of non-owner-occupant lending over time. The data show a sharp increase in non-owner-occupant lending used to purchase one- to four-family
See analysis of the factors influencing refinance activity in Robert B. Avery, Neil Bhutta, Kenneth P. Brevoort, and Glenn B. Canner (2011), The Mortgage Market in 2010: Highlights from the Data Reported under the Home Mortgage Disclosure Act, Federal Reserve Bulletin, vol. 97, pp. 160 16 See United Press International (2012), Investor Purchases Soar 65 Percent, UPI.com, March 30, www.upi.com/Business_News/Real-Estate/News/2012/03/30/Investor-Purchases-Soar-65-Percent/9321333117717.
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Mortgage Market in 2011

homes during the first half of the previous decade (table 4). The volume of non-owner-occupant lending fell sharply beginning in 2007 and has remained at comparably low levels through 2011. Although non-owner-occupant lending in 2011 remained subdued compared with levels reached in the middle of the decade, such lending did pick up from 2010, increasing nearly 10 percent. As shown in table 4, the post-2007 decline in non-owner-occupant lending has been more severe than that in owner-occupant lending. Between 2000 and 2005, the share of non-owneroccupant lending used to purchase one- to four-family homes rose, increasing over this period from about 9 percent to 16 percent (data derived from table 4).17 The share fell to about 11 percent in both 2009 and 2010 but rebounded to 13 percent in 2011.

Conventional versus Government-Backed Loans Although the total number of home-purchase loans has fallen substantially since 2005, virtually all of the decline has involved conventional lending; the volume of nonconventional homepurchase loans (sometimes referred to as government backed loans)including loans backed by insurance from the FHA or by guarantees from the VA, the Farm Service Agency (FSA), or the Rural Housing Service (RHS)has increased markedly since the mid-2000s. From 2006 to 2009, the total number of reported conventional home-purchase loans fell 77 percent, while the number of nonconventional home-purchase loans more than tripled (table 4). Although the number of nonconventional home-purchase loans has fallen since reaching its high mark in 2009, such loans still accounted for about 43 percent of home-purchase lending in 2011. The increase in nonconventional lending in recent years reflects several factors, such as increased loan-size limits allowed under the FHA and VA lending programs and reduced access (including morestringent underwriting and higher prices) to conventional loans, particularly those that allow the borrower to finance more than 80 percent of the property value.18

Research using credit record data suggests that in states that experienced the largest run-up in home prices, investors accounted for about one-half of the home-purchase loans. See Andrew Haughwout, Donghoon Lee, Joseph Tracy, and Wilbert van der Klaauw (2011), Real Estate Investors, the Leverage Cycle, and the Housing Market Crisis, Federal Reserve Bank of New York Staff Reports 514 (New York: Federal Reserve Bank of New York, September), www.newyorkfed.org/research/staff_reports/sr514.pdf. 18 Nonconventional loans play a small role in certain segments of the home purchase market. For example, nonconventional loans accounted for less than 1 percent of the loans extended to non-owner occupants for the purchase of a home in 2011. Also, nonconventional loans made up a relatively small share (about 24 percent) of the loans used to purchase manufactured homes (data derived from table 5).

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Mortgage Market in 2011

Nonconventional lending has also garnered a larger share of the refinance market. In 2006, only 2 percent of refinance loans were nonconventional, compared to 12 percent in 2011. This share dropped some from 2010, as the number of nonconventional refinance loans fell about 21 percent (table 4).19

The Private Mortgage Insurance Market In the conventional loan market, lenders typically require that a borrower seeking to purchase an owner-occupied property make a down payment of at least 20 percent of a homes value unless the borrower obtains some type of third-party backing, such as mortgage insurance. For a borrower seeking a conventional loan with a low down payment, a lender can require that the borrower purchase mortgage insurance from a private mortgage insurance (PMI) company to protect the lender against default-related losses up to a contractually established percentage of the principal amount. As a form of protection for lenders against losses from defaulting borrowers, PMI competes with FHA insurance and VA loan guarantees. The seven companies that reported data for 2011 dominate the PMI industry.20 Thus, the reported data cover the vast majority of PMI written in the United States. For 2011, the seven PMI companies reported on nearly 409,000 applications for insurance leading to the issuance of 312,000 insurance policies, up from about 370,000 applications and 260,000 policies in 2010 (derived from table 6). Reported volumes of PMI issuance in 2011, as in recent years, have been substantially smaller than the totals reached in 2002 and 2003, when PMI companies extended about 2 million policies a year. The large reduction in PMI issuance reflects several factors, including tighter underwriting adopted by the PMI companies in response to elevated claims and losses experienced during the recent recession and the ongoing recovery.21 Overall, 64 percent of the PMI policies issued in 2011 covered home-purchase loans, and the remainder covered refinance mortgages (home-improvement loans are classified as refinance
For more detailed analysis on the rise of government-backed lending in recent years, see Avery and others, The 2009 HMDA Data. 20 In 1993, the Mortgage Insurance Companies of America, a trade association, asked the FFIEC to process data from the largest PMI companies on applications for mortgage insurance. These data largely mirror the types of information submitted by lenders covered by HMDA. However, because the PMI companies do not receive all of the information about a prospective loan from the lenders seeking insurance coverage, some items reported under HMDA are not included in the PMI data. In particular, loan pricing information and requests for preapproval are unavailable in the PMI data. In the PMI data, the reported disposition of an application for insurance reflects the actions of the PMI companies or, in the case of a withdrawal of an application, the action of the lender. 21 For a more detailed analysis, see Avery and others, The 2009 HMDA Data.
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loans by the PMI reporters). Virtually all of the applications for PMI policies issued involved loans to purchase site-built properties, and almost all of the applications for PMI related to owner-occupied units. The data reported by the PMI industry over the years has consistently shown that most applications for insurance are approved, as lenders are very familiar with the underwriting policies of the insurers and generally are not going to submit an application that is unlikely to be approved. Overall, about 5 percent of PMI insurance applications were denied in 2011, down from about 10 percent in 2010 and 12 percent in 2009 but still notably higher than in 2006 and 2007, when only about 2 percent of the requests for insurance were turned down (data not shown in tables).22 As with the HMDA data, PMI companies report the reason for denial. The most commonly reported reason cited by lenders related to an issue with the collateral, most likely property value.

Junior-Lien Lending Junior-lien loans can be taken out either in conjunction with the primary mortgage (a piggyback loan) or independently of the first-lien loan. As noted, piggyback loans can be used by borrowers to avoid having to pay for private or government mortgage insurance. Similarly, piggyback loans can also be used to reduce the size of the first-lien loan to be within the size limits required by Freddie Mac or Fannie Mae without requiring a larger down payment by the borrower. Junior-lien loans that are taken out independently of a first lien can be used for any number of purposes, including to finance home-improvement projects or, in the case of openended home equity lines of credit, to provide a readily available source of credit that can be drawn on at the time the borrower needs the funds. Under the regulations that govern HMDA reporting, most of these standalone junior-lien loans are not reported.23 In 2006, close to 1.3 million junior liens used for the purchase of owner-occupied properties were reported under HMDA (table 7). This number fell by more than one-half in 2007, dropped sharply again in each of the ensuing years, and decreased to less than 42,000 such loans in 2010 and 2011. One million junior-lien loans were taken out to refinance loans backed
For the other applications that did not result in a policy being written, the application was withdrawn, the application file closed because it was not completed, or the request was approved but no policy was issued. 23 Unless a junior lien is used for home purchase or explicitly for home improvements, or to refinance an existing lien, it is not reported under HMDA. Further, home equity lines of credit, many of which are junior liens, do not have to be reported in the HMDA data regardless of the purpose of the loan.
22

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Mortgage Market in 2011

by owner-occupied properties, and this number also fell substantially starting in 2007 and continued to fall, reaching a low point of less than 74,000 in 2011. The HMDA data also include information on junior-lien loans used for homeimprovement purposes. In 2011, nearly 66,000 junior-lien loans were used for such a purpose, down some from about 80,000 reported in 2010. Both the 2010 and 2011 totals are sharply below the historic high mark of nearly 570,000 reached in 2006. Overall, junior-lien loans used for home improvement accounted for 35 percent of junior-lien loans reported under HMDA.

Loan Sales For each loan origination reported under HMDA in a given year, lenders report whether that loan was sold during the same year, and the type of institution to which the loan was sold.24 Broadly, these purchaser types can be broken into those that are government relatedGinnie Mae, Fannie Mae, Freddie Mac, and Farmer Macand those that are not. Ginnie Mae and Farmer Mac focus on loans backed directly by government guarantees or insurance, while Fannie Mae and Freddie Mac purchase conventional loans that meet certain loan size and underwriting standards. Overall, about 78 percent of the first-lien home-purchase and refinance loans for one- to four-family properties originated in 2011 were reported as sold during the year (data not shown in tables). The share of originations that are sold varies some from year to year and by type and purpose of the loan (table 8).25 For example, 69 percent of the conventional loans extended in 2011 for the purchase of owner-occupied one- to four-family dwellings were sold that year. In contrast, nearly 94 percent of the nonconventional loans used to purchase owner-occupied homes were reported as sold in 2011. The share of conventional loans made to non-owner occupants that are reported as sold is notably smaller than that of such loans made to owner occupants. Also, the vast majority of conventional loans extended for the purchase of manufactured homes are held in portfolio; only about 10 percent of such loans were sold in 2011.

Although one of the few sources of information on loan sales, the HMDA data tend to understate the importance of the secondary market. HMDA reporters are instructed to record loans sold in a calendar year different from the year originated as being held in portfolio, leading the reported loan sales to understate the proportion of each years originations that are eventually sold. 25 Some loans recorded as sold in the HMDA data are sold to affiliated institutions and thus are not true secondary-market sales. In 2011, 8.6 percent of the loans recorded as sold in the HMDA data were sales to affiliates.

24

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Mortgage Market in 2011

Borrower Incomes and Loan Amounts Under HMDA, lenders report the loan amount applied for and the applicant income that the lender relied on in making the credit decision, if income was considered in the underwriting decision. Lenders do not necessarily collect and report loan applicants entire income because in some cases borrowers have more income than is needed to qualify for the loan.

Borrower Income The vast majority of loan applications and loans reported under HMDA include income information. For example, in 2011, income information was not reported for less than 1 percent of the borrowers purchasing a home with a nonconventional loan and for 3 percent of those using a conventional loan (data not shown in tables). Income information is reported less often for refinance loans, particularly those that are nonconventional (about one-third of the FHA loans and 63 percent of the VA loans), most likely because of streamlined refinance programs that do not require current income to be considered in underwriting. While the available information on amounts borrowed and applicant income can be evaluated in many ways, we focus here on patterns by loan product and purpose. For homepurchase or refinance lending, borrowers using FHA and VA loans have lower mean or median incomes than borrowers using other loans despite the fact that the FHA (and VA) loan limits were increased substantially in 2008, potentially allowing the program to be used much more widely than by the lower- and moderate-income households that have been the traditional focus of the program (table 9). Although the share of FHA home purchase borrowers with incomes above $100,000 has roughly doubled since 2007 (the year before the increase in loan limits) to about 15 percent, the median income of borrowers getting FHA home purchase loans was still about 30 percent lower than those getting conventional loans (derived from table 9). The relatively low down-payment requirements on FHA-insured loansthe average loan-to-value ratio for FHA home-purchase loans was over 95 percent in 2011may be continuing to attract lower-income borrowers.26

See U.S. Department of Housing and Urban Development (2012), Quarterly Report to Congress on FHA Single-Family Mutual Mortgage Insurance Fund Programs, FY 2011 Q4 (Washington: HUD, January 31), http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/rmra/oe/rpts/rtc/fhartcqtrly.

26

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Mortgage Market in 2011

Loan Amounts Unlike the data on borrower incomes, loan amounts are provided for all applications and loans reported in the HMDA data. Loan amounts differ across loan types, with FHA or VA loans, on average, being smaller than conventional loans (which make up most of the other category in table 10). However, an upward shift in the distribution of loan amounts for both FHA and VA home-purchase loans has occurred in the past couple of years, continuing into 2011 (data for only 2011 shown in tables). The shift reflects several factors, including the higher loan limits allowed under these programs.

Application Disposition, Loan Pricing, and Status under the Home Ownership and Equity Protection Act In tables 11 and 12 , we categorize every loan application and request for preapproval reported in 2011 into 25 distinct product categories characterized by type of loan and property, purpose of the loan, and lien and owner-occupancy status. Each product category contains information on the number of total and preapproval applications, application denials, originated loans, loans with prices above the reporting thresholds established by HMDA reporting rules for identifying higher-priced loans, loans covered by the Home Ownership and Equity Protection Act of 1994 (HOEPA), and the mean and median annual percentage rate (APR) spreads for loans reported as higher priced.

Disposition of Applications As noted, the 2011 HMDA data include information on nearly 11.7 million loan applications, nearly 86 percent of which were acted on by the lender (data derived from table 11). With respect to the disposition of applications, patterns of denial rates are largely consistent with what has been observed in earlier years.27 Denial rates on applications for home-purchase loans are
The information provided in the tables is identical to that provided in analyses of earlier years of HMDA data. Comparisons of the numbers in the tables with those in tables from earlier years, including statistics on denial rates, can be made by consulting the following articles: Avery and others, The Mortgage Market in 2010; Avery and others, The 2009 HMDA Data; Robert B. Avery, Neil Bhutta, Kenneth P. Brevoort, Glenn B. Canner, and Christa N. Gibbs (2010), The 2008 HMDA Data: The Mortgage Market during a Turbulent Year, Federal Reserve Bulletin, vol. 96, pp. A169A211. Also see Robert B. Avery, Kenneth P. Brevoort, and Glenn B. Canner (2008), The 2007 HMDA Data, Federal Reserve Bulletin, vol. 94, pp. A107A146; Robert B. Avery, Kenneth P. Brevoort, and Glenn B. Canner (2007), The 2006 HMDA Data, Federal Reserve Bulletin, vol. 93, pp. A73A109; Robert B. Avery, Kenneth P. Brevoort, and Glenn B. Canner (2006), Higher-Priced Home Lending and the 2005 HMDA Data, Federal Reserve Bulletin, vol. 92, pp. A123A166; and Robert B. Avery, Glenn B. Canner, and
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Mortgage Market in 2011

notably lower than those observed on applications for refinance or home-improvement loans. Denial rates on applications backed by manufactured housing are much higher than those on applications backed by site-built homes. For example, the denial rate for first-lien conventional home-purchase loan applications for owner-occupied site-built properties was 14.8 percent in 2011, compared with a denial rate of 52.7 percent for such applications for owner-occupied manufactured homes. Under the provisions of HMDA, reporting institutions may choose to report reasons they provide consumers whose applications are turned down. Reporting institutions may cite up to three reasons for each denied application, although most of those that provide this information cite only one reason. An analysis of the reasons for denial provided to prospective borrowers whose applications for conventional credit for the purchase of owner-occupied homes were turned down finds that collateral-related issues and debt-to-income considerations were the two categories of reasons that have seen the largest increase since 2006 (data not shown in tables). Debt-to-income issues were also cited somewhat more often for applications for FHA or VA home-purchase loans, but collateral was the category that had the largest percentage increase. These relationships are not surprising given the changes in underwriting practices and the widespread decline in home values since 2006. In addition to the application data provided under HMDA, nearly 430,000 requests for preapproval were reported as acted on by the lender in 2011, down about 3 percent from 2010 (table 12). The majority of requests for preapprovals involved conventional loans. About 30 percent of these requests for preapproval were denied by the lender in 2011, a proportion that is higher than in 2010. Not unexpectedly, the number of requests for preapproval is down substantially from the levels recorded at the height of the housing boom, when market conditions favored home sellers and preapproval letters were a factor that enhanced the position of prospective homebuyers. In 2006, covered institutions reported that they received nearly 1.2 million requests for preapproval on which they took action (data not shown in tables).

Robert E. Cook (2005),New Information Reported under HMDA and Its Application in Fair Lending Enforcement, Federal Reserve Bulletin, vol. 91, pp. 34494.

14

Mortgage Market in 2011

The Incidence of Higher-Priced Lending Price-reporting rules under HMDA since late 2009 define higher-priced first-lien loans as those with an APR of at least 1.5 percentage points above the average prime offer rate (APOR) for loans of a similar type (for example, a 30-year fixed-rate mortgage).28 The spread for junior-lien loans must be at least 3.5 percentage points to be considered higher-priced. The APOR, which is published weekly by the FFIEC, is an estimate of the APR on loans being offered to high-quality prime borrowers based on the contract interest rates and discount points reported by Freddie Mac in its Primary Mortgage Market Survey (PMMS).29 The data show that the incidence of higher-priced lending across all products in 2011 was about 3.7 percent, up about 50 basis points or 0.5 percentage point from 2010 (table 11).30 The incidence varies across loan types, products, and purposes. First, in almost all cases, nonconventional loans have a lower incidence of higher-priced lending than do comparable conventional loan products, although the differences in incidence are much smaller than in the period when many conventional loans were subprime or near prime. In 2011, among rst-lien home-purchase loans for site-built homes, 3.9 percent of conventional loans had APRs above the price-reporting threshold, versus 2.8 percent of nonconventional loans. (Among nonconventional loans, those backed by VA guarantees have a particularly low incidence of being higher priced: In 2011, less than 0.04 percent of the VA-guaranteed first-lien homepurchase loans were higher priced.) Second, with few exceptions, rst-lien loans have a lower incidence of higher-priced lending than do junior-lien loans for the same purposes. For example, in 2011, the incidence of higher-priced lending for conventional rst-lien renance loans was 1.6 percent, whereas for comparable junior-lien loans it was 13.4 percent. This relationship is found despite the fact that
28

For more about the rule changes related to higher-priced lending, see Avery and others, The 2009 HMDA Data. 29 See Freddie Mac, Weekly Primary Mortgage Market Survey (PMMS), webpage, www.freddiemac.com/pmms; and Federal Financial Institutions Examination Council, New FFIEC Rate Spread Calculator, webpage, www.ffiec.gov/ratespread/newcalc.aspx. 30 In previous articles exploring the distortions created by the old loan pricing classification methodology (see Avery and others, The 2009 HMDA Data), we used an adjustment technique that tried to address those distortions. The adjustment technique was similar to the new reporting rules, though it was also clearly inferior to them and could not have been implemented without access to date information, which is not part of the public use file. Without this adjustment, comparison of higher-priced data for loans covered by the old reporting rules with such data for loans covered by the new ones is not appropriate. Even with the adjustment, it is not possible to adjust the data for loans reported under the old rules to make them fully comparable to data reported under the new rules. For this reason, we restrict our discussion here to the 2010 and 2011 data.

15

Mortgage Market in 2011

the threshold for reporting a junior-lien loan as higher priced is 2 percentage points higher than it is for so reporting a first-lien loan. Third, manufactured-home loans exhibit the greatest incidence of higher-priced lending across all loan categories, a result consistent with the elevated credit risk associated with such lending. For 2011, nearly 82 percent of the conventional rstlien loans used to purchase manufactured homes were higher priced. The HMDA data also show that the incidence of higher-priced lending is related to borrower incomes and the amounts borrowed, with borrowers with lower incomes and those receiving smaller loans more likely to obtain a higher-priced loan (memo items in tables 9 and 10). For example, 56 percent of home-purchase loans are extended to borrowers with incomes under $75,000, while such borrowers account for 72 percent of all higher-priced loans. Across loan amounts, 45 percent of the home-purchase loans under $100,000 are higher priced, but such loans account for less than 19 percent of the reported loans.

Rate Spreads for Higher-Priced Loans Although there is considerable variation across loan products in the incidence of higher-priced lending, the variation across products in mean and median APOR spreads as reported in the HMDA data is much smaller. For example, for 2011, the mean APOR spread reported for higher-priced first-lien conventional loans for the purchase of an owner-occupied site-built home was about 2.5 percentage points, compared with about 2.0 percentage points for higher-priced first-lien nonconventional loans used for the same purpose (table 11). It is worth noting that the vast majority of nonconventional loans reported as higher priced in 2011 exceeded the HMDA price-reporting thresholds by only a small amount: Specifically, 71 percent of the higher-priced nonconventional first-lien home-purchase loans had reported spreads within 50 basis points of the threshold. By comparison, only about 42 percent of the comparable conventional loans reported as higher priced had prices this close to the margin of reporting. In contrast, the share of higher-priced nonconventional refinancing loans with APORs close to the margin of reporting (32 percent) is a little less than the share of higherpriced conventional refinancing loans with such APORs (about 47 percent). As expected, consistent with the higher reporting threshold of junior-lien lending, higherpriced junior-lien loan products have higher mean and median APOR spreads than do higherpriced rst-lien loans. Higher-priced loans for manufactured homes differ from other loan 16

Mortgage Market in 2011

products in that they generally have the highest mean spreads. In 2011, the typical higher-priced conventional first-lien loan to purchase a manufactured home had a reported spread of about 5.7 percentage points, compared with an average spread of roughly 2.5 percentage points for comparable higher-priced loans for site-built properties.

HOEPA Loans The HMDA data indicate which loans are covered by the protections afforded by HOEPA. Under HOEPA, certain types of mortgage loans that have interest rates or fees above specified levels require additional disclosures to consumers and are subject to various restrictions on loan terms.31 For 2011, 574 lenders reported extending 2,387 loans covered by HOEPA (table 11; data regarding lenders not shown in tables). In comparison, 655 lenders reported on about 3,400 loans covered by HOEPA in 2010. In the aggregate, HOEPA-related lending made up less than 0.05 percent of all the originations of home-secured refinancings and home-improvement loans reported for 2011 (data derived from tables).32

LENDER CONCENTRATION IN THE MORTGAGE MARKET Recent press accounts have highlighted the outsized role of a few larger lending organizations in the mortgage market.33 Table 13 lists the top 10 mortgage originating organizations (inclusive of their reporting mortgage lending affiliates and subsidiaries) according to the HMDA data. Wells Fargo tops the list, having originated over 900,000 loans in 2011, which translates into a market share of about 13 percent.34 JPMorgan Chase and Bank of America each had a market share of over 5 percent, followed by U.S. Bank and Quicken Loans with over 2 percent. Wells Fargo, JPMorgan Chase, and Bank of America had considerably larger market shares in 2011 than in 2006, in part because of their acquisitions of Wachovia, Washington Mutual, and Countrywide, respectively. The remainder of the top 10 organizations had market shares under 2 percent, and

Unlike the threshold rules used to report higher-priced loans, the threshold rules to identify HOEPA loans did not change between 2009 and 2010, and thus the 2011 number of HOEPA loans is comparable to those of earlier years. 32 HOEPA does not apply to home-purchase loans. 33 For example, see Dakin Campbell and Hugh Son (2012), Wells Fargo Dominates Home Lending as BofA Retreats: Mortgages, Bloomberg, May 3, www.bloomberg.com/news/2012-05-03/wells-fargo-dominateshome-lending-as-bofa-retreats-mortgages.html. 34 We include all first-lien originations recorded in HMDA, regardless of purpose, loan type, or property type.

31

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Mortgage Market in 2011

the top 10 collectively issued about 37 percent of all mortgage originations reported in the HMDA data in 2011, roughly the same as in 2006. Notably, market shares derived from the HMDA data differ markedly from market shares recently reported in the press based on information compiled by Inside Mortgage Finance. It is important to note that for HMDA reporting purposes, institutions report only mortgage applications in which they make the credit decision. Under HMDA, if an application is approved by a third party (such as a correspondent) rather than the lending institution, then that party reports the loan as its own origination and the lending institution reports the loan as a purchased loan. Alternatively, if a third party forwards an application to the lending institution for approval, then the lending institution reports the application under HMDA (and the third party does not report anything). In contrast, Inside Mortgage Finance considers loans to have been originated by the acquiring institution even if a third party makes the credit decision. Thus, many of the larger lending organizations that work with large networks of correspondents report large volumes of purchased loans in the HMDA data, while Inside Mortgage Finance considers many of these purchased loans to be originations. To be sure, both market share numbers are important for understanding the supply side of the mortgage market. The HMDA data, by focusing on the entity that makes the approval decision, highlight that the mortgage market continues to be highly decentralized along certain dimensions, with a large number of relatively small entities operating at the retail level, working with mortgage applicants, evaluating their applications, and making lending decisions. That said, overall credit availability and pricing depends on a multitude of additional factors, such as GSE and FHA practices, lenders willingness and ability to take risk, competition between wholesale lenders, and general credit conditions and investor appetite for risk. Table 13 shows that among the top 10 organizations, many of them reported a large number of purchased loans in 2011, particularly Wells Fargo, Bank of America, and Ally Bank. As discussed earlier, many of these purchases are likely to be from correspondents, though it is not possible from the HMDA data to determine how many. It is also worth noting that organizations typically hold less than one-fourth of these purchased loans. Finally, the HMDA data indicate that the business strategies among the top 10 organizations appear to vary considerably. For example, around 30 percent of Wells Fargos and Bank of Americas originations were for home-purchase loans, compared with less than 18

Mortgage Market in 2011

10 percent for JPMorgan Chase and Quicken Loans. Citicorp and Ally Bank also concentrated more heavily on refinance loans than on home-purchase loans. These institutions also differ considerably in terms of the fraction of loans held in portfolio beyond the year of origination.35 For example, U.S. Bank and Citicorp each held in portfolio 40 percent or more of the conventional loans they originated, compared with less than 10 percent for Wells Fargo and JPMorgan Chase. The HMDA data also reveal considerable variation across these larger lenders in the types of loans (conventional compared with FHA, VA, or FSA) they tend to extend. For example, about half of the home-purchase loans reported by Wells Fargo were conventional, whereas about 90 percent of those originated by Citicorp were of this type.

THE CREDIT SCORES OF HOME-PURCHASE MORTGAGE BORROWERS Additional information about individuals obtaining mortgages to purchase homes can be gained by a review of credit record data collected by credit-reporting agencies. These data can be used to identify individuals taking out mortgages to finance a home purchase and, among these, individuals who are first-time homebuyers. Because the credit record data used here include the credit scores of individuals, we can use this metric to gauge the credit risk profile of homepurchase borrowers. The data are from the FRBNY/Equifax Consumer Credit Panel. The panel is a nationally representative longitudinal database of individuals with detailed information, at a quarterly frequency beginning in 1999, on consumer and mortgage debt and loan performance drawn from the credit records collected and maintained by Equifax, one of the three national credit bureaus.36 The data include three key pieces of information with respect to this analysis: (1) details on each mortgage outstanding for a given consumer, including the year of origination; (2) each consumers credit score as of the end of each quarter; and (3) each consumers residential

For this analysis, we consider only those loans originated in the first three quarters of the year; loans originated in the last quarter of the year are less likely to be reported as sold simply because there is not much time to sell the loan. 36 The data are drawn using a methodology to ensure that the same individuals can be tracked over time, and that the data are representative of all individuals with a credit record as of the end of each quarter. For more information on these data, see Donghoon Lee and Wilbert van der Klaauw (2010), An Introduction to the FRBNY Consumer Credit Panel, Federal Reserve Bank of New York Staff Reports 479 (New York: Federal Reserve Bank of New York, November). It is important to note that all individuals in the database are anonymous: Names, street addresses, and Social Security numbers are not included in the data. Individuals are distinguished and can be linked over time through a unique, anonymous consumer identification number assigned by Equifax.

35

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Mortgage Market in 2011

location at the level of the census block (a subunit of a census tract).37 The data used here are through the end of 2011. Home-purchase loans are not explicitly identified in credit record data, but the panel nature of the data used here allows us to follow a given individual over time and infer whether that borrower purchased a home during any particular period. Specifically, we classify an individual as a homebuyer if the credit record indicates that he or she took out a new mortgage and moved to a different location (the credit record shows that the individual moved from one census block to another). First-time home-purchase borrowers are identified in a similar manner, but their credit records must show no evidence of a previous mortgage. The credit record data show that for home-purchase borrowers in general, as well as for first-time homebuyers financing their purchase, the median credit score has increased about 40 points since 2006. Furthermore, median scores now exceed by a considerable margin the median scores for home-purchase borrowers at any time in the past 12 years (figure 2). From the perspective of changes in access to credit, a particular group to focus on is that consisting of individuals with scores in the bottom decile of all home-purchase borrowers. Here the data show that the score that delineates the bottom decile has increased nearly 50 points since the end of 2006. Individuals with scores below this increased threshold are likely to have a very difficult time qualifying for credit and, if they manage to qualify for a loan, are likely to pay higher prices. Consistent with this observation, overall, the share of home-purchase borrowers with scores below 620, a traditional demarcation line for individuals who are typically characterized as having a credit history that would be considered subprime, fell from about 19 percent of borrowers at the end of 2006 to about 7 percent at the end of the third quarter of 2011 (data not shown in tables).

LENDING ACROSS POPULATION GROUPS AND NEIGHBORHOODS One of the strengths of the HMDA data is that the annual data can be merged together to track changes in lending activity across population groups and areas. In this section, we show changes
This credit score is generated from the Equifax Risk Score 3.0 model. The Equifax Risk Score 3.0 is a credit score produced from a general-purpose risk model that predicts the likelihood an individual will become 90 days or more delinquent on any account within 24 months after the score is calculated. The Equifax Risk Score 3.0 ranges from 280 to 850, with a higher score corresponding to lower relative risk (for more information, see www.equifax.com). For the exercise here, we track the credit score of each individual as of the quarter before he or she took out a mortgage. Although the lender may have used a different score to underwrite the loan, it is likely that the scores used here are reflective of such scores.
37

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Mortgage Market in 2011

in lending from 2010 to 2011 to borrowers sorted by income, race or ethnicity and by the income or minority population characteristics of the areas where they reside. We also present an analysis of lending in areas characterized by their degree of economic distress.

Changes in Lending, 2010 to 2011 As noted earlier, both home-purchase and refinancing lending fell from 2010 to 2011. Virtually all population segments experienced these declines, although the falloff in activity was more severe for some groups than for others (table 14, memo item).38 Across racial or ethnic groups, all minority populations except white Hispanics experienced relatively large declines in activity; white Hispanics and non-Hispanic whites both experienced relatively smaller declines in activity. Lower-income borrowers, those purchasing homes in lower-income census tracts, and those residing in areas with larger minority populations also experienced relatively large reductions in home-purchase lending. Patterns for refinancing differed from home-purchase lending as the largest declines were among non-Hispanic whites, middle- and higher-income borrowers, and those residing in areas with smaller shares of minorities and populations with relatively higher incomes. The only group to experience an increase in refinance lending was low-income borrowers; refinance lending to this population segment increased about 3 percent from 2010 to 2011. Populations differ considerably in their use of various loan products. Most notably, blacks, white Hispanics, lower-income borrowers, and those residing in areas with larger shares of minority populations use nonconventional loans to purchase homes to a greater extent than other groups. Most likely, the greater reliance of these groups on nonconventional loans reflects the relatively low down-payment requirements of the FHA and VA lending programs, requirements that are attractive to groups that, on average, tend to have fewer liquid assets available to meet down-payment and closing-cost requirements. The HMDA data indicate that all groups relied a bit less on nonconventional loans in 2011 than in 2010. Reduced reliance on nonconventional loans occurred both for home-purchase and refinance lending.

Changes in lending to different groups over the 200610 period were presented in an earlier article. See Avery and others, The Mortgage Market in 2010.

38

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Mortgage Market in 2011

Credit Circumstances in Distressed Neighborhoods Since the start of the housing downturn, access to mortgage credit has been an acute public policy concern, particularly for households with lower incomes or in neighborhoods that have been hardest hit by foreclosures. Mortgage originations have declined broadly since 2005 and, as we discussed in the review of last years HMDA data, these declines have been greater in highly distressed neighborhoods. To determine if credit has yet begun to flow more freely in such neighborhoods, we use the HMDA data to compare mortgage credit flows from 2010 to 2011. As in last years review, we identify distressed neighborhoods using the scores produced by the Department of Housing and Urban Development (HUD) for the Neighborhood Stabilization Program.39 The NSP was created by the Housing and Economic Recovery Act of 2008 to provide funds for state and local governments seeking to support neighborhoods with high levels of property abandonment and foreclosure. In deciding which neighborhoods to target, HUD uses a statistical model that estimates the likelihood that the neighborhood is experiencing high rates of foreclosure and mortgage delinquency. The outputs of this model are used to assign to each tract an NSP score ranging from 1 to 20, with a higher score indicating a greater likelihood of distress and with the scores scaled so that each score point is given to 5 percent of census tracts. While an evaluation of the success of the NSP itself is well beyond the scope of this article, we can use these scores to classify census tracts according to the degree of distress they face. The change from 2010 to 2011 in home-purchase lending for owner-occupied properties, broken down by quintiles of the NSP score, is shown (table 15). Lending declined 7.2 percent overall, though the declines were substantially greater in high-distress neighborhoods. In tracts with NSP scores of 17 to 20, home-purchase lending decreased 13.8 percent, compared with 3.3 percent in tracts with NSP scores below 5. The steeper decline in mortgage credit flows to highly distressed areas continues a trend that has been observed since the onset of the housing market downturn. Differences in the extent of decline are also observed across borrower income levels. Lending fell more substantially for lower- and middle-income borrowers (12.3 percent and
39

See Avery and others, The Mortgage Market in 2010.

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Mortgage Market in 2011

11.3 percent, respectively) than it did for upper-income borrowers (3.8 percent). Indeed, for upper-income borrowers, the decline in lending appears unrelated to the degree of neighborhood distress, as indicated by the nonmonotonic relationship between lending declines and NSP score quintile. However, for lower- and middle-income borrowers, the declines were notably larger when neighborhood distress increased. Somewhat surprisingly, lending to middle-income borrowers fell more quickly than it did for lower-income borrowers in the bottom three quintiles of the NSP score (scores of 1 to 12). In tracts with NSP scores above 12, lending to lowerincome borrowers has fallen off by a larger percentage than it has for higher-income borrowers. Attributing these declines to supply- or demand-side factors is not straightforward. As shown in table 15, the number of applications for home-purchase loans fell by slightly more than the number of loan originations, a pattern that holds for almost all NSP quintiles. The sharper decline in applications suggests that reduced mortgage flows may primarily reflect a drop in demand; however, since potential applicants may have foregone applying because they suspected their application would be denied, the sharper fall in applications is insufficient to prove that these declines represent demand-side factors alone. Most likely, these changes reflect a combination of changes in supply and demand. One supply factor that may be influencing how mortgage credit is flowing is the mix of lenders extending credit. In percentage terms, the largest changes involved thrift institutions, whose lending fell by almost one-fourth in 2011, and credit unions, whose lending increased by over 8 percent. While these institution types accounted for only a small share of lending in 2011 (13 percent; data not shown in table), in neither case was there a clear relationship between the change in lending and the degree of neighborhood distress. Instead, the more rapid decline in lending to distressed neighborhoods appears to involve lending by commercial banks and independent mortgage companies. Both institution types experienced larger declines in lending tracts with higher NSP scores. While lending by commercial banks was down in 2011 for all NSP quintiles, lending by independent mortgage companies increased in tracts in the least amount of distress (the bottom quintile of NSP scores) in 2011 and fell 11 percent in tracts in the most distress. Nevertheless, both institution types had about a 15 percentage point spread between the changes in lending in the highest and lowest NSP quintiles.

23

Mortgage Market in 2011

In addition to types of lenders, we can also examine lending activity by largest lenders. Home-purchase lending by the 10 largest lenders in 2011 fell more sharply in 2011 (17 percent) than lending by other financial institutions (2.6 percent). However, lending by both declined more in highly distressed neighborhoods than in neighborhoods experiencing less distress. The results of this analysis suggest that highly distressed neighborhoods continue to experience reduced mortgage flows, which mirrors the pattern observed for the 2005 to 2010 period discussed in last years review. These declines were particularly pronounced for lowerincome borrowers. And while it is difficult to apportion these declines to demand and supply considerations, the sharper declines in distressed areas appear, for the most part, to have been widespread across lenders.

DIFFERENCES IN LENDING OUTCOMES BY RACE, ETHNICITY, AND SEX OF THE BORROWER One reason the Congress amended HMDA in 1989 was to enhance its value for fair lending enforcement by adding to the items reported the disposition of applications for loans and the race, ethnicity, and gender of applicants. A similar motivation underlay the decision to add pricing data for higher-priced loans in 2004, although such data serve other purposes including to help identify lenders active in the higher cost or risk segments of the mortgage market and provide information on the volume and locations of borrowers receiving higher-priced loans. Over the years, analyses of HMDA data have consistently found substantial differences in the incidence of higher-priced lending and in application denial rates across racial and ethnic lines, differences that cannot be fully explained by factors included in the HMDA data.40 Analyses also have found that differences across groups in mean APR spreads paid by those with higher-priced loans were generally small.41 Here we examine the 2011 HMDA data to determine the extent to which these differences persist.

See Avery, Brevoort, and Canner, The 2006 HMDA Data; Avery, Brevoort, and Canner, HigherPriced Home Lending and the 2005 HMDA Data; and Avery, Canner, and Cook, New Information Reported under HMDA. 41 See, for example, Andrew Haughwout, Christopher Mayer, and Joseph Tracy (2009), Subprime Mortgage Pricing: The Impact of Race, Ethnicity, and Gender on the Cost of Borrowing, Staff Report 368 (New York: Federal Reserve Bank of New York, April); and Marsha J. Courchane (2007), The Pricing of Home Mortgage Loans to Minority Borrowers: How Much of the APR Differential Can We Explain? Journal of Real Estate Research, vol. 29 (4), pp. 399439.

40

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Mortgage Market in 2011

The analysis here presents aggregated lending outcomes across all reporting institutions. Patterns for any given financial institution may differ from those shown, and for any given financial institution, relationships may vary by loan product, geographic market, and loan purpose. Further, although the HMDA data include some detailed information about each mortgage transaction, many key factors that are considered by lenders in credit underwriting and pricing are not included. Accordingly, it is not possible to determine from HMDA data alone whether racial and ethnic pricing disparities reflect illegal discrimination. However, analysis using the HMDA data can account for some factors that are likely related to the lending process. Given that lenders offer a wide variety of loan products for which basic terms and underwriting criteria can differ substantially, the analysis here can only be viewed as suggestive. Comparisons of average outcomes (both loan pricing and denials) for each racial, ethnic, or gender group are made both before and after accounting for differences in the borrowerrelated factors contained in the HMDA data (income; loan amount; location of the property, or MSA; and presence of a co-applicant) and for differences in borrower-related factors plus the specic lending institution used by the borrower.42 Comparisons for lending outcomes across groups are of three types: gross (or unmodied), modied to account for borrower-related factors (or borrower modied), and modied to account for borrower-related factors plus lender (or lender modied).43 The analysis here distinguishes between conventional and nonconventional lending, reflecting the different underwriting standards and fees associated with these two broad loan product categories.44

Incidence of Higher-Priced Lending by Race and Ethnicity and Sex As noted earlier, 2010 was the first HMDA reporting year for which all of the loans subject to higher-priced loan reporting used the new Freddie Mac PMMS threshold (the PMMS threshold was also used for the last three months of 2009). Before October 1, 2009, a Treasury-based

Excluded from the analysis are applicants residing outside the 50 states and the District of Columbia as well as applications deemed to be business related. Applicant gender is controlled for in the racial and ethnic analyses, and race and ethnicity are controlled for in the analyses of gender differences. 43 For purposes of presentation, the borrower- and lender-modied outcomes shown in the tables are normalized so that, for the base comparison group (non-Hispanic whites in the case of comparison by race and ethnicity and males in the case of comparison by sex), the mean at each modication level is the same as the gross mean. 44 Although results here are reported for nonconventional lending as a whole, the analysis controls for the specific type of government-backed loan program (FHA, VA, or FSA/RHS) used by the borrower or loan applicant.

42

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Mortgage Market in 2011

threshold was used. The change in threshold makes it problematic to compare the reported incidence of higher-priced lending in 2010 or 2011 with the incidence reported for previous years. Nevertheless, in previous articles, we have employed a methodology that adjusted the Treasury-based spread to a spread over the 30-year fixed-rate mortgage APOR reported in the PMMS. For almost all of the period from 2006 to 2009, this methodology gave a good approximation of the incidence of loans with APOR spreads more than 1.75 percentage points above the PMMS (25 basis points higher than the cutoff for higher-priced reporting in 2010). Calculations using the adjusted spread showed that the estimated incidence of loans more than 1.75 percentage points above the PMMS is significantly reduced from 2006 to 2008 for all racial and ethnic groups and that the differences across groups are considerably smaller since 2008 than in the years prior.45 Data reported for the last three months of 2009 using the new threshold showed only modest differences across groups. As noted earlier, the overall reported incidence of higher-priced lending was about 50 basis points higher in 2011 than in 2010 (data for 2010 not shown in tables). Pricing relationships observed in the 2011 HMDA data are very similar to those found in the 2010 data. The 2011 HMDA data indicate that black and Hispanic-white borrowers are more likely, and Asian borrowers less likely, to obtain conventional loans with prices above the HMDA pricereporting thresholds than are non-Hispanic white borrowers. These relationships hold both for home-purchase and refinance lending and for nonconventional loans (tables 16.A and 16.B). For example, for conventional home-purchase lending in 2011, the incidence of higher-priced lending was 7.8 percent for black borrowers, 7.3 percent for Hispanic white borrowers, and 1.3 percent for Asians, compared with 3.9 percent for non-Hispanic white borrowers. The gross differences in the incidence of higher-priced lending between non-Hispanic whites and blacks or Hispanic whites in 2011 are significantly reduced, but not completely eliminated, after controlling for lender and borrower characteristics. For example, the gross 2011 difference in the incidence of higher-priced conventional lending for home-purchase loans between Hispanic whites and non-Hispanic whites of 3.4 percentage points falls to only about 0.55 percentage point when the other factors available within the HMDA data are accounted for. The large gap in pricing between blacks and non-Hispanic whites is similarly reduced when other factors are considered. The pricing disparities across groups are significantly lower than
45

See Avery and others, The 2008 HMDA Data.

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Mortgage Market in 2011

the higher-priced incidence disparities observed from 2004 to 2007 using both the old Treasurybased threshold and our PMMS-based adjusted spread. With regard to the gender of applicants, we find relatively small differences in the incidence of higher-priced lending between single applicants of different genders or duel applicants of different genders once all available factors are taken into account.

Rate Spreads by Race, Ethnicity, and Sex The 2011 data indicate that among borrowers with higher-priced loans, the gross APOR spreads are similar across groups for both home-purchase and refinance lending. This result holds for both conventional (table 17.A) and nonconventional lending (table 17.B). For example, for conventional home-purchase loans, the gross mean APOR spread was 2.49 percentage points for black borrowers and 2.76 percentage points for Hispanic white borrowers, while it was 2.49 percentage points for non-Hispanic white borrowers and 2.41 percentage points for Asian borrowers. Accounting for borrower-related factors or the specific lender used by the borrowers has little effect on the differences across groups.

Denial Rates by Race, Ethnicity, and Sex Analyses of the HMDA data in previous years have consistently found that denial rates vary across applicants grouped by race or ethnicity. This continues to be the case in 2011. As in past years, blacks and Hispanic whites had notably higher gross denial rates in 2011 than nonHispanic whites, while the differences between Asians and non-Hispanic whites generally were fairly small by comparison (tables 18.A and 18.B). For example, the denial rates for conventional home-purchase loans were 30.9 percent for blacks, 21.7 percent for Hispanic whites, 14.8 percent for Asians, and 11.9 percent for non-Hispanic whites. The pattern was about the same for nonconventional home-purchase lending, although the gap in gross denial rates between blacks or Hispanic whites and non-Hispanic whites was notably smaller than for conventional home-purchase loans. For both conventional and nonconventional home purchase lending, controlling for borrower-related factors in the HMDA data generally reduces the differences among racial and ethnic groups. Accounting for the specic lender used by the applicant reduces differences further, although unexplained differences remain between non-Hispanic whites and other racial 27

Mortgage Market in 2011

and ethnic groups. An analysis of refinance loans shows similar patterns, although the differences between gross denial rates between blacks and non-Hispanic whites and between Hispanic whites and non-Hispanic whites tend to be larger than for home purchase lending. For example, the gross difference between black and non-Hispanic white borrowers refinancing using a conventional loan was 20.5 percentage points.

Some Limitations of the Data in Assessing Fair Lending Compliance Previous research and experience gained in the fair lending enforcement process show that unexplained differences in the incidence of higher-priced lending and in denial rates among racial or ethnic groups stem, at least in part, from credit-related factors not available in the HMDA data, such as credit history (including credit scores), loan-to-value ratios, and differences in loan characteristics. Differential costs of loan origination and the competitive environment also may bear on the differences in pricing, as may differences across populations in creditshopping activities. Despite these limitations, the HMDA data play an important role in fair lending enforcement. The data are regularly used by bank examiners to facilitate the fair lending examination and enforcement processes. When examiners for the federal banking agencies evaluate an institutions fair lending risk, they analyze HMDA price data and loan application outcomes in conjunction with other information and risk factors that can be drawn directly from loan files or electronic records maintained by lenders, as directed by the Interagency Fair Lending Examination Procedures.46 The availability of broader information allows the examiners to draw firm conclusions about institution compliance with the fair lending laws. It is important to keep in mind that the HMDA data, as currently constituted, can be used only to detect differences in pricing across groups for loans with APRs above the reporting threshold; pricing differences may exist among loans below the threshold. This gap in the loan pricing information will be addressed in coming years as the Consumer Financial Protection Bureau implements the expanded data reporting requirements set forth in the DoddFrank Wall Street Reform and Consumer Protection Act of 2010 (DoddFrank Act), including the provision requiring the reporting of rate spread information for all loans.

46

The Interagency Fair Lending Examination Procedures are available at www.ffiec.gov/PDF/fairlend.pdf.

28

Mortgage Market in 2011

ASSESSING THE ACCURACY OF BORROWER INCOME REPORTED IN THE HMDA DATA During the housing boom of the 2000s, one underwriting practice that proliferated was the granting of mortgages with little or no documentation of income and assets. To investigate the extent to which borrower incomes may have been overstated on mortgage applications as a result of such practices, we compare the incomes reported for home-purchase borrowers in the HMDA data with the incomes of homebuyers taking out mortgages reported in the decennial census for 2000 (Census 2000) and the ACS for 2005 through 2010.47 While incentives to overstate income on mortgage applications sometimes exist, no such incentive exists when reporting income for the census or ACS. Thus, the Census 2000 and ACS data may provide true measures of income of homebuyers with which to gauge the accuracy of income reported on mortgage applications.48 The Census Bureau annually conducts the ACS, a household survey gathering a wide variety of information, including overall family income, homeownership status, and mortgage status. Because the survey was conducted on a somewhat smaller scale prior to 2005, we use only ACS data for 2005 and after, and we use Census 2000 data to measure borrower income at the beginning of the decade.49 For each year of the analysis, we compute average family income at the state level for home-purchase borrowers in the HMDA data and for families in the ACS and Census 2000 data that appear to have recently purchased their home with a mortgage (those that reported they own their home, have a mortgage, and moved in the past year).50 We then compute the ratio of HMDA income to ACS income (or, from Census 2000, census income), state by state

Others have conducted similar research, comparing HMDA data with American Housing Survey data for the years 1995 through 2007. Our analysis confirms and expands on theirs by comparing HMDA data with a different data source and by extending the analysis through 2010. See McKinley L. Blackburn and Todd Vermilyea (2012), The Prevalence and Impact of Misstated Incomes on Mortgage Loan Applications, Journal of Housing Economics, vol. 21 (June), pp. 15168. 48 There are circumstances when applicants for mortgages do not need to report all income to a prospective lender in order to qualify for a home loan. As such, incomes reported on mortgage applications tend to be lower than actual total household income in the absence of deliberately overstated income. 49 Census 2000 and ACS microdata were extracted from Steven Ruggles, J. Trent Alexander, Katie Genadek, Ronald Goeken, Matthew B. Schroeder, and Matthew Sobek (2010), Integrated Public Use Microdata Series: Version 5.0 (machine-readable database) (Minneapolis: University of Minnesota). 50 We use data only for metropolitan areas since the HMDA data provide much better coverage of mortgage originations in such areas. In addition, results were suppressed for states with fewer than 50 households contributing to the statewide figure.

47

29

Mortgage Market in 2011

and for three different periods: 2000, 200506, and 200910. Ratios substantially greater than 1 imply widespread overstatement of income on mortgage applications. Figure 3 suggests that income on mortgage applications was widely overstated in a number of states in 2005 and 2006, particularly California, Florida, Hawaii, Nevada, and Rhode Island. In these states, average borrower income as reflected in the HMDA data was 30 percent or more above the average ACS borrower income. In contrast, in 2000, with the exception of California, HMDA borrower income was no more than 10 percent above borrower income as reported in Census 2000 across all states. Finally, in 2009 and 2010, we observe a return to consistent incomes across data sources, with borrower incomes reported in HMDA and the ACS within 10 percent of each other in almost every state. Users of the HMDA data should be aware that borrower income was likely significantly overstated during the peak of the housing boom, particularly in some areas of the country. One potential implication of this finding is that lending to lower-income borrowers, as measured in the HMDA data, may be attenuated around the peak of the housing market. TRANSITION TO THE 2010 CENSUS DATA AND REVISED CENSUS-TRACT BOUNDARIES Census data are used to evaluate the performance of lending institutions in complying with the CRA and the nations fair lending laws. For example, family income data derived from the census are used to categorize census tracts by their relative median family income, and race and ethnicity data are used to characterize the minority population status of census tracts and other geographies.51 In the CRA context, the relative income of census tracts is used to identify which census tracts are considered lower income (low or moderate income) and, as a consequence, a focus of CRA attention. In the fair lending enforcement context, census-tract minority population characteristics are used, for example, to help detect potential redlining behavior, where, for example, a lender has a policy or practice that results in little or no lending in a geographic area because of its racial or ethnic composition. Using census sources to identify income, population, and housing characteristics of census tracts and broader areas has become more complicated recently. Unlike Census 2000, which used a survey questionnaire that asked a great many detailed questions (often referred to
Relative income is the ratio of the census-tract median family income to the median family income of the broader area (either the MSA or the nonmetropolitan portion of the state) where the census tract is located.
51

30

Mortgage Market in 2011

as the long form), the 2010 census used a brief questionnaire (referred to as the short form). In particular, the 2010 census focused on gathering household population counts and race, ethnicity, sex, and age characteristic information, but it provides relatively little other informationand no data on household or family income. In lieu of collecting extensive detailed information from every household once a decade in conjunction with the decennial census, the Census Bureau now annually conducts the ACS. The ACS collects detailed population, income, and housing information from a representative sample of about 3 million households using a long-form questionnaire. Because of a relatively small sample size, the annual ACS data do not provide sufficient information to establish reliable estimates of census-tract characteristics. However, the Census Bureau aggregates ACS data across years and publishes data for each census tract based on the most recent five-year combined ACS data. The first five-year ACS aggregate data made available were derived from the 200509 annual surveys and used the census-tract boundaries established for the 2000 decennial census. The more recent 200610 combined ACS data were released to the public in December 2011 and are available from the FFIEC at its HMDA website. The 200610 ACS data use the census-tract boundaries created for the 2010 census. Using five-year aggregated data derived from the ACS, it is possible to categorize each census tract by its relative median family income.

FFIEC Treatment of Updated Census and ACS Data The FFIEC has announced that, for purposes of preparing HMDA disclosure reports and for CRA performance evaluations, the 200610 ACS data will be used to classify census tracts by relative median family income and that these classifications will not be changed for a period of five years.52 Five years hence, updated relative income information will be derived from the combined 201115 ACS data, and census tracts will be reclassified according to their updated income profiles. Although, in principle, annual updates from the ACS could be used to reclassify census tracts by their relative incomes each year, the potential movement of census

For a discussion of the shift to the 200610 ACS data for census-tract relative-income classification, see Federal Financial Institutions Examination Council (2011) FFIEC Announces the Use of American Community Survey Data In Its Census Data Files, press release, October 19, www.ffiec.gov/press/pr101911. The classification may change if the Office of Management and Budget (OMB) establishes new MSAs or alters the boundaries of existing MSAs. The OMB is scheduled to release new MSA delineations in 2013.

52

31

Mortgage Market in 2011

tracts from one relative-income category to another would greatly complicate CRA enforcement and make it difficult for lending institutions to plan and monitor their own activities. A key aspect of the HMDA reporting rules is the requirement that lenders identify the census-tract locations of the properties involved in the applications and loans they report on each year. The 2011 HMDA data used census tracts as enumerated for the 2000 decennial census and do not reflect any of the updated 2010 census or ACS data. Census-tract identifiers for the forthcoming 2012 HMDA data will be those enumerated for the 2010 census: Analysis of these data will use the 2010 census data and the 200610 ACS data. There were substantial changes in the number and boundaries of census tracts between the 2000 and 2010 censuses. As a consequence of population growth and migration, as well as other factors, such as new road construction, the 2010 census includes many more census tracts than the 2000 census, and the geographic areas of many census tracts used for the 2000 census have been altered. Overall, the 2000 census included about 66,300 census tracts; the 2010 census includes about 74,000 census tracts. About 46 percent of the 2010 census tracts have the same geographic boundaries as in 2000, and about 72 percent have a land area that is 95 percent or more identical to the area in 2000. For purposes of this article, the census tracts that have 2010 areas that are 95 percent or more the same as in 2000 are referred to as substantially similar census tracts. The shift from the 2000 to the 2010 census has important implications for those using the HMDA data. Perhaps most important is the possibility that a loan related to a given property may have been identified as being in a census tract in a particular relative-income group one year, but a loan on that same property may be reclassified into a different relative-income category the next year simply because of the shift from the income data based on the 2000 census to the income data based on the 200610 ACS. Reclassification could occur because the income profile of the population in the census tract has changed (altering the numerator in the relative-income calculation), because the income profile of the broader area has changed (altering the denominator in the relative-income classification), or both.

Evaluating the Effects of Census Data Changes In order to gauge the potential effects of census data changes on the classification of lending activity, we undertook some simulations using the 2011 HMDA data. The analysis here focuses 32

Mortgage Market in 2011

on the reclassification of census tracts due to changes in their relative family incomes and the reclassification of home lending (of all types) due to the reclassification of the census tracts where the properties associated with the loans are located. Because the location of branch offices may influence an institutions home-lending activity and because branch locations are an important component of CRA performance evaluations, we also assess the effects of the census data changes on branch office classification by census-tract income. Unlike lending, where an institution can potentially alter the geographic pattern of the home loan applications it receives by changes in marketing, outreach to real estate agents and homebuilders, and other techniques, branch office locations cannot be readily changed. We evaluate the pure effects of updated population income estimates by comparing census-tract income classifications using the 2000 census data with classifications derived from the 200509 ACS surveys. Both the 2000 census and the 200509 ACS use the same censustract boundaries. Also, to ensure that changes in MSA boundaries over the course of the past decade do not affect the analysis, we use the census-tract relative-income classifications as carried on the 2011 FFIEC HMDA data files. These files reflect the 2000 decennial estimates of median family income for each census tract but use current MSA boundary definitions. Thus, the only factors that can affect our estimates of income reclassifications are the updates to census-tract or broader area median family incomes that come about because of changes in family income estimates from shifting from the 2000 census to the more recent data based on the 200509 ACS.53

Census-Tract Reclassification Our analysis indicates that the transition from the 2000 decennial census to the 200509 ACS data for classifying census tracts by relative income would result in significant changes in census-tract income category classification. For example, 17 percent of the census tracts that were classified as moderate income using the 2000 income data would be reclassified as middle income, and 1 percent would be reclassified as higher income (table 19). Because these census
Using the 200509 ACS income data in this exercise is not ideal since the actual income estimates used for CRA and HMDA purposes will be obtained from the 200610 ACS data. To address the possibility that the 200509 ACS income data and the 200610 ACS income data for individual census tracts differ significantly, and consequently affect reclassification estimates, we conducted a second analysis that is limited to the subset of census tracts that have substantially similar boundaries as defined for the 2000 and 2010 censuses. Results are in table 19. As shown in the table, the patterns are very similar whether the analysis is done using the 200509 ACS data and the 2000 census-tract boundaries or the 200610 ACS data using only the substantially similar census tracts.
53

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Mortgage Market in 2011

tracts would no longer be classified as falling in the lower-income category, lending and other activities, including branch office locations, in these census tracts would no longer be a focus of CRA attention. However, about 15 percent of middle-income census tracts would be reclassified as moderate income, and activities in these census tracts would gain emphasis in CRA performance evaluations.

Loan Reclassification Results are similar when the analysis considers reclassification of home loans instead of census tracts, but some of the transitions are more pronounced. An analysis using the 2000 decennial census and the 200509 ACS data indicates that about 24 percent of the home loans extended in 2011 and classified as falling in moderate-income census tracts would transition and be reclassified as falling in a middle-income census tract and that 2 percent of the loans would transition to a higher-income census tract. At the same time, about 9 percent of the loans falling in middle-income areas would be reclassified as falling in moderate-income areas. However, in terms of the absolute number of loans, had the new census-tract relative-income classifications been used in 2011, there would have been a net increase in mortgage lending to low- and moderate-income neighborhoods of about 150,000 loans, about 22 percent higher than the number of LMI loans in 2011 under current census-tract relative-income classifications (data derived from table 19).

Branch Office Reclassification For our analysis of the effects of the transition from the 2000 decennial census to the ACS-based data on the classification of branch offices by census-tract relative income, we use the location of branch offices as reported in the Summary of Deposits (SOD) as of June 30, 2011. The SOD is an annual survey, compiled by the Federal Deposit Insurance Corporation (FDIC), of branch office deposits for all FDIC-insured banking institutions.54 The data include the location (state, county, and census tract) of each branch (and headquarters) office and the dollar amount of deposits that are allocated to that branch by the banking institution. For this exercise, we excluded the locations of automated teller machines (ATMs). Although ATMs are considered in CRA performance evaluations under the services test, it seems unlikely that ATM locations
54

See Federal Deposit Insurance Corporation, Summary of Deposits, webpage, www2.fdic.gov/sod.

34

Mortgage Market in 2011

have much influence on home-lending activity, the main focus of this article.55 In total, the branch office analysis included about 98,000 branch offices. As in the analysis of census tracts and home lending described above, our analysis of branch office reclassification indicates that the switch from the 2000 decennial census data to the more recent ACS-based income data would have a notable effect on the classification of branch offices by census-tract relative income. For example, 20 percent of the branch offices that were classified as located in a moderate-income census tract using the 2000 income data would be reclassified as middle income, and 2 percent would be reclassified as higher income, using the 200509 ACS data. Because these branch offices would no longer be classified as located in lower-income census tracts, they would no longer be a focus of CRA attention. However, about 14 percent of branches classified as being located in middle-income census tracts based on the 2000 census data would be reclassified as being located in moderate-income census tracts, and consequently, these offices would gain emphasis in CRA performance evaluations. Because there are more branch offices in middle-income census tracts than in low- or moderate-income census tracts, the transition to the updated census information will result in a net increase of about 3,400 branch offices in areas that are the focus of CRA attention.

CRA compliance evaluations focus on three aspects of performance: lending, services, and investment. For more information, see Federal Financial Institutions Examination Council, CRA Rating Search Frequently Asked Questions, webpage, www.ffiec.gov/craratings/ratings_faq.htm.

55

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Mortgage Market in 2011

APPENDIX A: REQUIREMENTS OF REGULATION C The Federal Reserve Boards Regulation C requires lenders to report the following information on home-purchase and home-improvement loans and on renancings:

For each application or loan application date and the date an action was taken on the application action taken on the application approved and originated approved but not accepted by the applicant denied (with the reasons for denialvoluntary for some lenders) withdrawn by the applicant le closed for incompleteness preapproval program status (for home-purchase loans only) preapproval request denied by financial institution preapproval request approved but not accepted by individual loan amount loan type conventional insured by the Federal Housing Administration guaranteed by the U.S. Department of Veterans Affairs backed by the Farm Service Agency or Rural Housing Service lien status rst lien junior lien unsecured loan purpose home purchase renance home improvement type of purchaser (if the lender subsequently sold the loan during the year) Fannie Mae 36

Mortgage Market in 2011

Ginnie Mae Freddie Mac Farmer Mac Private securitization Commercial bank, savings bank, or savings association Life insurance company, credit union, mortgage bank, or finance company Affiliate institution Other type of purchaser

For each applicant or co-applicant race ethnicity sex income relied on in credit decision

For each property location, by state, county, metropolitan statistical area, and census tract type of structure one- to four-family dwelling manufactured home multifamily property (dwelling with ve or more units) occupancy status (owner occupied, non-owner occupied, or not applicable)

For loans subject to price reporting spread above comparable Treasury security for applications taken prior to October 1, 2010

spread above average prime offer rate for applications taken on or after October 1, 2010

For loans subject to the Home Ownership and Equity Protection Act indicator of whether loan is subject to the Home Ownership and Equity Protection Act

37

Mortgage Market in 2011

1. Distribution of reporters covered by the Home Mortgage Disclosure Act, by type of institution, 200011
Number Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Depository institution Savings Credit All institution union 4,721 1,691 6,412 4,686 1,714 6,400 4,698 1,799 6,497 4,675 1,903 6,578 4,962 2,030 6,992 4,878 4,846 4,847 4,855 4,810 4,677 4,497 2,047 2,037 2,019 2,026 2,017 2,041 2,017 6,925 6,883 6,866 6,881 6,827 6,718 6,514 Mortgage company Independent 981 962 986 1,171 1,317 1,341 1,334 1,132 957 925 848 812 Affiliated 332 290 310 382 544 582 685 638 550 399 371 306
1

All 1,313 1,252 1,296 1,553 1,861 1,923 2,019 1,770 1,507 1,324 1,219 1,118

All institutions 7,725 7,652 7,793 8,131 8,853 8,848 8,902 8,636 8,388 8,151 7,937 7,632

NOTE: Here and in all subsequent tables, components may not sum to totals because of rounding. 1. Subsidiary of a depository institution or an affiliate of a bank holding company. SOURCE: Here and in subsequent tables and figures except as noted, Federal Financial Institutions Examination Council, data reported under the Home Mortgage Disclosure Act (www.ffiec.gov/hmda).

38

Mortgage Market in 2011

2. Number and distribution of home lenders, by type of lender and by number of loans, 2011
Type of lender, and subcategory (asset size in millions of dollars) Depository institution Banking institution Less than 250 250499 500999 1,000 or more All Credit union Less than 250 250499 500999 1,000 or more All All depository institutions Less than 250 250499 500999 1,000 or more All Mortgage company2 All All institutions Less than 50 Number Percent of subcategory1 Number 5099 Percent of subcategory1 100249 Number Percent of subcategory1 250499 Number Percent of subcategory1 500999 Number Percent of subcategory1 1,000 or more Number Percent of subcategory1 Number All Percent of subcategory1

1,215 231 106 66 1,618 783 42 16 0 841 1,998 273 122 66 2,459 185 2,644

51.6 24.9 17.7 11.1 36.2 58.5 13.9 7.8 .0 41.9 54.1 22.2 15.2 8.7 37.9 17.0 34.9

509 131 61 25 726 301 52 14 4 371 810 183 75 29 1,097 68 1,165

21.6 14.1 10.2 4.2 16.2 22.5 17.2 6.9 2.4 18.5 21.9 14.9 9.3 3.8 16.9 6.2 15.4

463 317 120 67 967 207 111 49 13 380 670 428 169 80 1,347 133 1,480

19.7 34.2 20.0 11.3 21.6 15.5 36.6 24.0 7.9 18.9 18.1 34.8 21.0 10.6 20.8 12.2 19.5

126 173 150 68 517 36 70 58 28 192 162 243 208 96 709 135 844

5.4 18.6 25.0 11.4 11.6 2.7 23.1 28.4 17.1 9.6 4.4 19.7 25.9 12.7 10.9 12.4 11.1

24 56 119 129 328 11 25 48 40 124 35 81 167 169 452 149 601

1.0 6.0 19.9 21.7 7.3 .8 8.3 23.5 24.4 6.2 .9 6.6 20.8 22.3 7.0 13.7 7.9

17 20 43 239 319 0 3 19 79 101 17 23 62 318 420 419 839

.7 2.2 7.2 40.2 7.1 .0 1.0 9.3 48.2 5.0 .5 1.9 7.7 42.0 6.5 38.5 11.1

2,354 928 599 594 4,475 1,338 303 204 164 2,009 3,692 1,231 803 758 6,484 1,089 7,573

100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100

1. Distribution sums horizontally. For example, the second column, first row shows that 51.6 percent of commercial banks with assets of less than $250 million originated less than 50 loans in 2011. 2. Independent mortgage company, subsidiary of a depository institution, or affiliate of a bank holding company.

39

Mortgage Market in 2011

3. Home loan activity of lending institutions covered under the Home Mortgage Disclosure Act, 200011 A. Applications, requests for preapproval, and purchased loans
Number Year Applications received for home loans, by type of property 14 family Multifamily Home Home Refinance purchase improvement 8,278,219 6,543,665 1,991,686 37,765 7,692,870 14,284,988 1,849,489 48,416 1,529,347 53,231 7,406,374 17,491,627 8,179,633 24,602,536 1,508,387 58,940 9,792,324 16,072,102 2,202,744 61,895 11,672,852 10,928,866 7,609,143 5,017,998 4,216,589 3,847,796 3,630,284 15,898,346 14,045,961 11,566,182 7,729,143 9,982,768 8,433,333 7,390,690 2,539,158 2,480,827 2,218,224 1,404,008 831,504 670,147 686,788 57,668 52,220 54,230 42,792 26,141 25,550 35,048 Requests for preapproval1 n.a. n.a. n.a. n.a. 332,054 396,686 411,134 432,883 275,808 216,865 170,026 185,943 Purchased loans Total

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

2,398,292 3,767,331 4,829,706 7,229,635 5,146,617 5,874,447 6,236,352 4,821,430 2,921,821 4,301,021 3,229,295 2,944,662

19,249,627 27,643,094 31,310,285 41,579,131 33,607,736 36,439,157 34,155,360 26,702,092 17,391,570 19,574,888 16,376,147 14,873,415

NOTE: Here and in subsequent tables, except as noted, data include first and junior liens, site-built and manufactured homes, and ownerand non-owner-occupant loans. 1. Consists of requests for preapproval that were denied by the lender or were accepted by the lender but not acted upon by the borrower. In this article, applications are defined as being for a loan on a specific property; they are thus distinct from requests for preapproval, which are not related to a specific property. Information on preapproval requests was not required to be reported before 2004. n.a. Not available.

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Mortgage Market in 2011

3. Home loan activity of lending institutions covered under the Home Mortgage Disclosure Act, 200011 B. Loans
Number Year Home purchase 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 4,787,356 4,938,809 5,124,767 5,596,292 6,429,988 7,382,012 6,740,322 4,663,267 3,119,692 2,792,939 2,546,590 2,416,854 Loans, by type of property 14 family Home Refinance improvement 2,435,420 892,587 7,889,186 828,820 10,309,971 712,123 15,124,761 678,507 7,583,928 966,484 7,101,649 6,091,242 4,817,875 3,457,774 5,772,078 4,968,603 4,311,870 1,093,191 1,139,731 957,912 568,287 389,981 341,401 339,427 Total

Multifamily 27,305 35,557 41,480 48,437 48,150 45,091 39,967 41,053 31,509 18,974 19,168 27,111

8,142,668 13,692,372 16,188,341 21,447,997 15,028,550 15,621,943 14,011,262 10,480,107 7,177,262 8,973,972 7,875,762 7,095,262

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Mortgage Market in 2011

4. Home loan applications and home loans for one- to four-family properties, by occupancy status of home and type of loan, 200011
Number Applications Year Owner occupied Conventional Nonconventional
1

Loans Non-owner occupied Owner occupied

1

Non-owner occupied Conventional Nonconventional

1

Conventional

Nonconventional

Conventional Nonconventional1

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

6,350,643 5,776,767 5,511,048 6,212,915 7,651,113 9,208,214 8,695,877 5,960,571 2,940,059 2,017,982 1,822,790 1,791,526 6,051,484 12,737,863 15,623,327 21,779,329 14,476,350 14,494,441 12,722,112 10,173,282 5,829,633 7,290,061 6,325,488 5,550,634 1,833,277 1,771,472 1,459,049 1,430,380 2,081,528 2,401,030 2,335,338 2,072,688 1,294,162 743,968 583,892 581,023

1,311,101 1,268,885 1,133,770 1,014,865 799,131 610,650 576,043 599,637 1,424,483 1,966,335 1,763,826 1,558,447 110,380 705,784 742,208 1,236,467 497,700 262,438 208,405 375,860 1,240,472 2,058,210 1,449,925 1,136,045 91,575 16,276 11,582 13,876 11,887 10,053 12,645 16,717 26,544 28,536 34,449 38,194

604,919 627,598 747,758 943,248 1,335,241 1,850,174 1,653,154 1,044,112 647,340 442,409 425,345 461,481 379,299 823,748 1,111,588 1,563,430 1,084,536 1,135,929 1,112,891 1,012,827 650,042 619,286 642,401 682,769 65,286 60,598 58,080 63,806 109,105 127,857 132,694 128,700 83,036 58,754 51,415 60,763

A. Home purchase 12,524 3,411,887 19,688 3,480,441 13,923 3,967,834 8,623 4,162,412 6,839 4,946,423 3,814 3,792 4,823 6,116 6,711 5,742,377 5,281,485 3,582,949 1,727,692 1,174,648

963,345 1,003,795 870,599 761,716 574,841 438,419 416,744 423,506 972,605 1,323,966 1,169,729 1,025,827 64,882 524,228 535,370 895,735 304,591 158,474 122,134 196,897 522,243 1,000,911 655,574 512,839 10,896 6,722 4,878 5,226 5,557 4,483 6,115 9,409 12,347 11,256 11,810 14,392

404,133 440,498 547,963 667,613 906,014 1,199,509 1,040,668 655,916 415,930 290,560 284,700 313,138 198,695 516,616 706,570 1,007,674 621,667 603,914 585,142 496,577 337,914 349,147 356,183 384,911 37,047 32,990 30,533 31,113 56,341 62,298 65,842 61,321 39,170 28,568 26,190 27,768

8,378 14,128 8,474 4,560 2,710 1,707 1,425 896 3,465 3,765 1,833 1,443 1,293 12,181 9,377 15,871 8,082 3,257 1,016 894 3,824 7,511 8,100 13,023 760 548 197 103 94 70 44 59 158 164 57 3,532

5,853 1,090,328 4,768 1,076,446 B. Refinance 2,502 2,170,162 17,592 6,836,106 14,504 9,058,654 23,310 13,205,472 13,516 6,649,588 5,538 2,553 4,213 8,996 15,211 6,336,004 5,382,950 4,123,507 2,593,793 4,414,509

15,519 3,948,746 21,242 3,401,097 C. Home improvement 1,548 843,884 1,143 788,560 636 676,515 325 642,065 224 904,492 218 150 119 266 246 391 6,808 1,026,340 1,067,730 887,123 516,612 349,993 303,344 293,735

1. Loans insured by the Federal Housing Administration or backed by guarantees from the U.S. Department of Veterans Affairs, the Farm Service Agency, or the Rural Housing Service.

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Mortgage Market in 2011

5. Loans on manufactured homes, by occupancy status of home and type of loan, 200411
Number Year Owner occupied Conventional 107,686 101,539 102,458 95,584 68,821 43,543 44,856 40,312 79,838 73,520 64,969 59,591 44,342 37,001 26,340 25,299 17,119 20,239 20,886 19,428 12,621 9,781 8,012 8,244
1

Non-owner occupied Nonconventional1 125 56 257 92 93 29 29 218 57 26 68 74 177 73 69 161 5 3 2 2 36 1 2 75

Conventional Nonconventional A. Home purchase 23,974 27,229 30,530 28,554 27,615 20,630 17,086 14,663 B. Refinance 6,922 7,727 11,750 16,174 21,926 21,768 16,243 17,927 19,105 13,963 11,392 7,920 7,655 7,482 6,507 6,331 6,240 6,332 6,817 6,002

2004 2005 2006 2007 2008 2009 2010 2011 2004 2005 2006 2007 2008 2009 2010 2011 2004 2005 2006 2007 2008 2009 2010 2011
1. See table 4, note 1.

9,751 5,024 8,919 4,765 C. Home improvement 128 219 490 889 681 439 427 349 1,269 1,372 1,425 1,494 1,324 1,116 999 972

43

Mortgage Market in 2011

6. Private mortgage insurance applications and issuance for one- to four-family properties, by occupancy status of home and type of property, 200011
Number Applications Issuance Nonowner occupied Owner occupied Owner occupied Nonowner occupied Manufactured Manufactured Manufactured Manufactured Sitebuilt Sitebuilt Sitebuilt Sitebuilt 1 1 1 housing housing housing housing1 A. Home purchase 1,204,520 n.a. 95,549 n.a. 955,988 n.a. 75,473 n.a. 1,266,440 n.a. 122,639 n.a. 1,002,385 n.a. 90,929 n.a. 1,324,958 n.a. 153,277 n.a. 1,022,754 n.a. 115,573 n.a. 1,315,221 n.a. 175,958 n.a. 1,021,476 n.a. 134,677 n.a. 1,078,275 10,111 192,086 1,287 807,480 7,508 143,917 984 886,749 838,304 1,260,666 928,978 341,311 214,054 245,677 259,245 856,112 1,056,788 1,372,551 597,353 438,019 346,978 507,137 454,405 275,541 145,953 149,480 10,470 9,526 7,928 4,082 535 172 219 n.a. n.a. n.a. n.a. 6,037 3,702 2,554 2,108 1,442 429 135 196 174,174 134,545 148,057 127,773 14,372 7,644 11,547 14,771 29,870 40,771 46,139 31,352 23,217 24,201 36,508 33,822 3,611 1,437 1,664 1,480 1,273 1,113 759 92 11 8 676,758 659,755 1,015,240 591,108 206,878 154,716 193,215 7,512 6,655 5,531 2,012 125 55 89 n.a. n.a. n.a. n.a. 3,956 2,384 1,567 1,313 695 126 56 72 130,945 98,744 109,772 66,842 5,208 4,750 8,272 10,859 17,453 23,035 27,116 17,243 13,239 14,187 22,533 11,519 1,121 587 838 1,171 993 774 367 29 0 0 n.a. n.a. n.a. n.a. 138 88 78 58 34 4 0 0

Year

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

B. Refinance2 n.a. 185,721 n.a. 663,465 n.a. 775,020 n.a. 1,014,558 233 389,563 136 121 104 123 15 2 0 309,821 234,587 362,961 257,189 153,633 99,598 109,866

1. Before 2004, property type was not collected; totals for sitebuilt and manufactured housing are shown in the "Sitebuilt" column. 2. Includes home-improvement loans. Private mortgage insurance companies do not distinguish between refinance loans and homeimprovement loans in reporting. Loan totals are the summation of refinance and home-improvement loans. n.a. Not available.

44

Mortgage Market in 2011

7. Home loans for one- to four-family properties, by occupancy status of home, type of loan, and lien status, 200411
Number Owner occupied Year First lien 2004 2005 2006 2007 2008 2009 2010 2011 2004 2005 2006 2007 2008 2009 2010 2011 2004 2005 2006 2007 2008 2009 2010 2011 4,209,787 4,520,378 4,013,196 3,031,606 1,636,194 1,132,424 1,049,990 1,036,112 6,185,418 5,607,642 4,347,348 3,462,944 2,374,781 4,300,322 3,860,760 3,327,415 357,618 409,947 360,321 301,078 179,506 166,865 134,370 129,851 Conventional Junior lien Unsecured2 736,636 1,221,999 1,268,289 551,343 91,498 42,224 40,338 40,334 464,170 728,362 1,035,602 660,563 219,012 114,187 87,986 73,682 395,582 468,375 553,152 435,187 181,402 84,414 74,941 60,423 ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... 151,292 148,018 154,257 150,858 155,704 98,714 94,033 103,461
1

Non-owner occupied Conventional Nonconventional1 First lien Junior lien Unsecured2 2,703 1,685 1,407 888 3,461 3,756 1,821 1,438 8,069 3,236 989 879 3,814 7,495 8,092 13,004 30 17 18 35 135 99 35 64 7 22 18 8 4 9 12 5 13 21 27 15 10 16 8 19 54 49 20 18 13 28 17 45 ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... 10 4 6 6 10 37 5 3,423

Nonconventional First lien Junior lien Unsecured2 First lien Junior lien Unsecured2 A. Home purchase 573,606 1,235 ... 853,490 52,524 ... 437,552 416,143 422,450 971,528 1,322,489 1,168,343 1,024,696 304,298 158,198 121,761 196,544 521,863 1,000,422 655,334 512,629 2,697 2,197 3,957 7,510 10,477 8,197 8,218 7,116 867 601 1,056 1,077 1,477 1,386 1,131 293 276 373 353 380 489 240 210 2,243 1,873 1,735 1,579 1,610 2,541 2,663 2,949 ... ... ... ... ... 1,049,555 878,325 605,714 410,377 288,526 149,954 162,343 50,202 5,553 2,034 1,683 1,307 12,711 25,423 38,712 23,241 9,070 6,737 5,725 5,392 8,153 10,756 13,739 11,508 5,473 3,193 2,486 2,257 ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... 8,160 8,998 8,190 8,143 7,215 5,414 5,927 7,020

... 283,017 ... 311,831 B. Refinance ... 608,956 ... ... ... ... ... 578,491 546,430 473,336 328,844 342,410

... 350,458 ... 379,519 C. Home improvement 617 40,028 413 423 320 260 518 929 4,327 42,544 43,913 41,670 26,482 19,961 17,777 18,491

1. See table 4, note 1. 2. Unsecured loans are collected only for home-improvement loans under the Home Mortgage Disclosure Act. . . . Not applicable.

45

Mortgage Market in 2011

8. Distribution of home loan sales for one- to four-family properties, by occupancy status of home and type of loan, 200011
Percent Owner occupied Year Conventional MEMO: Share sold Share sold to GSEs2 64.8 66.8 71.0 72.3 74.2 75.9 74.8 70.1 71.6 70.1 69.7 68.9 47.4 61.3 66.8 74.2 69.0 69.9 65.7 61.7 65.3 79.4 76.8 72.7 6.3 6.4 5.9 10.5 23.6 27.2 22.0 19.1 14.7 24.9 21.2 19.1 31.3 34.6 36.7 33.1 25.5 18.7 19.0 29.1 40.1 40.1 37.0 34.2 18.0 37.2 40.4 44.8 27.6 19.7 15.2 21.9 38.0 52.8 46.1 46.4 1.1 1.5 1.4 .8 6.0 7.0 5.3 6.4 8.7 17.8 13.2 11.4
1

Non-owner occupied Nonconventional1 MEMO: Share Share sold sold to GSEs2 81.4 92.2 87.9 80.8 63.7 49.7 61.3 74.9 95.1 88.9 91.7 80.3 86.3 92.1 81.3 87.4 88.0 85.7 79.0 86.9 95.7 93.5 90.5 89.5 52.9 73.7 55.3 35.0 20.2 27.1 29.5 39.0 74.7 56.1 47.4 .3 22.9 23.0 29.7 21.6 11.5 16.3 15.0 27.6 21.6 35.2 24.1 35.2 42.8 33.2 45.4 50.7 35.9 40.1 29.6 23.9 20.4 36.0 43.8 57.6 .5 1.1 3.6 3.9 7.4 8.6 15.9 11.9 6.3 9.8 28.1 .1

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Conventional Nonconventional MEMO: Share MEMO: Share sold Share sold Share sold sold to GSEs2 to GSEs2 A. Home purchase 89.1 46.0 53.7 29.3 86.1 46.2 57.9 34.0 88.7 43.7 62.5 36.4 91.2 40.7 63.1 31.8 92.2 40.5 63.5 23.6 89.9 88.6 87.6 90.0 91.4 92.7 93.5 84.5 85.0 85.7 93.8 93.2 89.3 86.8 85.1 88.8 89.7 90.2 91.3 15.6 22.3 28.4 43.8 48.7 46.2 60.4 70.6 80.0 63.4 60.6 45.3 32.6 31.7 32.5 36.5 35.0 29.7 33.4 69.7 69.3 61.4 60.3 56.4 18.0 19.0 26.9 36.3 34.7 34.8 34.5 21.7 38.4 43.2 40.4 22.6 16.6 15.7 23.9 33.0 40.1 40.3 43.5 .4 .8 .9 .7 7.5 8.8 8.9 12.1 14.5 13.4 12.6 13.4

30.3 61.9 B. Refinance 50.0 47.3 51.5 61.2 45.0 65.9 48.0 69.8 44.2 62.2 33.5 31.8 34.5 35.4 37.9 64.7 64.9 61.1 56.8 61.2

37.8 65.4 49.8 66.4 C. Home improvement 4.7 4.4 7.6 3.9 7.1 4.0 6.7 6.5 23.5 23.1 25.3 31.8 30.8 49.2 38.9 34.7 26.8 30.2 29.4 26.4 20.0 17.7 18.3 19.8

1. See table 4, note 1. 2. Loans sold to government-sponsored enterprises (GSEs) include those with a purchaser type of Fannie Mae, Freddie Mac, Ginnie Mae, or Farmer Mac.

46

Mortgage Market in 2011

9. Cumulative distribution of home loans, by borrower income and by purpose and type of loan, 2011
Percent Home purchase Upper bound of borrower income (thousands of dollars)1 24 49 74 99 124 149 199 249 299 More than 299 MEMO: Borrower income, by selected loan type (thousands of dollars) 1 Mean Median 66.3 56 79.0 69 111.1 79 92.1 68 73.2 51 76.9 67 88.0 76 121.9 92 118.3 90 76.5 56 FHA 5.3 41.5 69.4 84.9 92.5 96.1 98.7 99.4 99.7 100 VA 1.1 23.2 56.7 77.0 88.4 94.0 98.2 99.4 99.7 100 Other
2

Refinance Total 3.7 31.0 55.9 71.9 81.9 87.8 93.7 96.3 97.5 100 MEMO: Higher priced3 9.5 48.3 72.2 83.9 89.8 92.9 95.9 97.2 98.0 100 FHA 3.5 28.2 58.1 77.8 88.6 93.9 98.0 99.2 99.6 100 VA 2.3 19.5 48.0 69.3 83.1 90.5 96.6 98.7 99.4 100 Other
2

Total 2.4 17.4 38.4 56.6 70.4 79.4 89.2 93.6 95.8 100

MEMO: Higher priced3 10.2 41.5 67.2 81.8 89.4 93.2 96.4 97.7 98.3 100

3.2 25.4 47.0 62.6 73.9 81.3 89.6 93.7 95.8 100

2.4 16.6 36.8 54.9 68.9 78.2 88.4 93.1 95.4 100

NOTE: First-lien mortgages for owner-occupied, one- to four-family, site-built properties; excludes business loans. Business-related loans are those for which the lender reported that the race, ethnicity, and sex of the applicant or co-applicant are not applicable. For loans with two or more applicants, lenders covered under the Home Mortgage Disclosure Act (HMDA) report data on only two. Income for two applicants is reported jointly. 1. Income amounts are reported under HMDA to the nearest $1,000. 2. Other loans include loans originated with a Farm Service Agency or Rural Housing Service guarantee and conventional loans. 3. Higher-priced loans are those with annual percentage rates 1.5 percentage points or more above the average prime offer rate for loans of a similar type published weekly by the Federal Financial Institutions Examination Council. FHA Federal Housing Administration. VA Department of Veterans Affairs.

47

Mortgage Market in 2011

10. Cumulative distribution of home loans, by loan amount and by purpose and type of loan, 2011
Percent Home purchase Upper bound of loan amount (thousands of dollars)1 24 49 74 99 149 199 274 417 625 729 More than 799 MEMO: Loan amount (thousands of dollars) Mean Median1 170.2 147 217.2 191 234.7 180 210.1 167 141.6 109 185.3 160 212.9 185 220.3 173 217.0 172 141.6 104 FHA VA
2

Refinance Total MEMO: Higher priced3 2.8 13.9 29.8 44.9 68.8 82.0 91.2 96.9 98.8 99.2 100 FHA VA
2

Other

Other

Total

MEMO: Higher priced3 4.3 16.8 32.8 47.5 68.4 80.3 89.4 96.9 99.0 99.3 100

.1 2.0 9.6 22.1 50.9 71.7 88.5 97.4 99.6 99.9 100

.0 .4 2.6 7.8 28.3 53.6 77.5 94.5 99.1 99.7 100

.5 3.2 9.7 18.3 38.9 55.1 71.9 88.8 96.0 97.4 100

.3 2.5 9.0 18.7 42.2 60.9 78.4 92.4 97.6 98.5 100

.1 1.6 7.4 17.3 44.5 66.5 85.3 96.0 99.3 99.9 100

.0 .7 3.9 10.5 32.9 55.8 77.6 94.6 99.0 99.6 100

.5 3.3 10.3 20.2 41.2 58.1 74.7 92.0 97.0 98.1 100

.5 3.0 9.8 19.5 41.1 58.7 75.8 92.5 97.3 98.3 100

NOTE: First-lien mortgages for owner-occupied, one- to four-family, site-built properties; excludes business loans. Business-related loans are those for which the lender reported that the race, ethnicity, and sex of the applicant or co-applicant are not applicable. 1. Loan amounts are reported under the Home Mortgage Disclosure Act to the nearest $1,000. 2. See table 9, note 2. 3. See table 9, note 3. FHA Federal Housing Administration. VA Department of Veterans Affairs.

48

Mortgage Market in 2011

11. Disposition of applications for home loans, and origination and pricing of loans, by type of home and type of loan, 2011
Applications Type of home and loan Number submitted Acted upon by lender Number Number denied Percent denied Number Number Percent 1.51.99 Loans originated Loans with APOR spread above the threshold1 Distribution, by percentage points of APOR spread 22.49 2.52.99 33.99 44.99 5 or more APOR spread (percentage points) Mean Median Number of HOEPAcovered loans2

14 FAMILY 3 NONBUSINESS RELATED Owner occupied Site built Home purchase Conventional First lien Junior lien Government backed First lien Junior lien Refinance Conventional First lien Junior lien Government backed First lien Junior lien Home improvement Conventional First lien Junior lien Government backed First lien Junior lien Unsecured (conventional or government backed) Manufactured Conventional, first lien Home purchase Refinance Other Non-owner occupied 4 Conventional, first lien Home purchase Refinance Other BUSINESS RELATED3 Conventional, first lien Home purchase Refinance Other MULTIFAMILY Conventional, first lien Home purchase Refinance Other Total
5

1,438,327 57,851 1,450,709 1,930

1,260,646 50,569 1,274,493 1,407

186,025 7,915 203,893 233

14.8 15.7 16.0 16.6

995,061 39,943 1,009,654 1,115

38,660 5,465 28,592 4

3.9 13.7 2.8 .4

41.6 ... 71.3 ...

22.0 ... 21.5 ...

13.3 ... 3.2 ...

14.6 38.6 1.1 25.0

5.8 48.1 2.1 50.0

2.9 13.3 .9 25.0

2.5 4.5 2.0 5.2

2.1 4.2 1.8 4.8

... ... ... ...

5,367,738 122,890 1,115,624 354

4,595,645 113,873 829,981 262

1,021,597 36,232 264,225 57

22.2 31.8 31.8 21.8

3,299,037 71,341 503,259 190

51,664 9,550 29,744 6

1.6 13.4 5.9 3.2

46.8 ... 31.7 ...

16.6 ... 26.0 ...

11.0 ... 20.5 ...

13.6 30.0 19.6 ...

6.0 38.9 1.7 66.7

6.1 31.2 .4 33.3

2.6 4.8 2.5 4.9

2.1 4.5 2.3 4.8

735 201 46 0

211,771 131,977 15,879 8,455

187,603 123,254 11,175 6,705

51,680 57,825 3,407 3,476

27.5 46.9 30.5 51.8

126,491 59,607 6,846 2,914

10,663 6,781 1,723 2,472

8.4 11.4 25.2 84.8

29.0 ... 18.8 ...

16.8 ... 23.0 ...

13.8 ... 26.2 ...

17.8 30.8 25.5 3.0

7.9 33.5 2.8 5.9

14.8 35.7 3.7 91.1

3.2 4.9 2.8 7.0

2.6 4.5 2.6 7.1

366 187 10 0

230,011

224,145

113,447

50.6

102,899

...

...

...

...

...

...

...

...

...

...

...

196,525 51,727 70,033

189,483 46,960 62,119

99,788 18,555 22,064

52.7 39.5 35.5

39,960 24,477 33,238

32,623 7,933 5,777

81.6 32.4 17.4

4.5 17.1 32.9

3.4 9.7 15.6

5.3 10.8 9.9

13.8 21.9 14.0

16.2 16.5 10.6

56.7 24.0 17.0

5.7 3.9 4.1

5.4 3.6 2.6

... 577 214

417,027 648,094 98,538

368,926 548,887 88,891

58,290 161,447 36,593

15.8 29.4 41.2

285,333 355,243 48,084

13,696 13,207 2,760

4.8 3.7 5.7

46.4 59.1 24.6

16.6 14.9 12.7

11.2 8.6 7.5

13.6 10.3 19.8

5.6 4.5 17.5

6.6 2.7 17.9

2.6 2.3 3.5

2.1 1.8 3.4

... 32 13

30,458 31,687 10,157

29,464 30,609 8,904

1,066 1,813 983

3.6 5.9 11.0

27,589 28,177 7,693

564 549 119

2.0 1.9 1.5

24.8 25.7 17.7

24.5 21.0 15.1

22.9 26.6 13.5

24.3 18.9 23.5

2.7 6.4 20.2

.9 1.5 10.1

2.6 2.6 3.3

2.5 2.5 3.3

... 2 ...

10,146 19,588 5,314 11,742,810

9,367 18,303 4,904 10,086,575

1,106 2,410 719 2,354,846

11.8 13.2 14.7 23.3

7,848 15,238 4,025 7,095,262

166 229 42 262,989

2.1 1.5 1.0 3.7

27.7 27.5 11.9 35.5

28.3 26.2 28.6 15.6

19.3 18.3 14.3 9.9

18.1 15.7 19.1 15.0

3.0 6.6 7.1 9.6

3.6 5.7 19.1 14.4

2.6 2.7 3.5 3.2

2.4 2.4 2.9 2.5

... 1 3 2,387

1. Average prime offer rate (APOR) spread is the difference between the annual percentage rate on the loan and the APOR for loans of a similar type published weekly by the Federal Financial Institutions Examination Council. The threshold for first-lien loans is a spread of 1.5 percentage points; for junior-lien loans, it is a spread of 3.5 percentage points. 2. Loans covered by the Home Ownership and Equity Protection Act of 1994 (HOEPA), which does not apply to home-purchase loans. 3. Business-related applications and loans are those for which the lender reported that the race, ethnicity, and sex of the applicant or co-applicant are not applicable; all other applications and loans are nonbusiness related. 4. Includes applications and loans for which occupancy status was missing. 5. Includes business-related and nonbusiness-related applications and loans for owner-occupied and non-owner-occupied properties. . . . Not applicable.

49

Mortgage Market in 2011

12. Home-purchase lending that began with a request for preapproval: Disposition and pricing, by type of home, 2011
Requests for preapproval Type of home Number acted upon by lender Number denied Percent denied Applications preceded by requests for preapproval1 Acted upon by lender Number Number submitted Number denied Loan originations whose applications were preceded by requests for preapproval Loans with APOR spread above the threshold2 Distribution, by percentage points of APOR spread 1.51.99 22.49 2.52.99 33.99 44.99 5 or more

Number

Number

Percent

APOR spread (percentage points) Mean spread Median spread

14 FAMILY NONBUSINESS RELATED3 Owner occupied Site built Conventional First lien Junior lien Government backed First lien Junior lien Manufactured Conventional, first lien Other Non-owner occupied 4 Conventional, first lien Other BUSINESS RELATED Conventional, first lien Other MULTIFAMILY5 Conventional, first lien Other Total
2. See table 11, note 1. 3. See table 11, note 3. 4. See table 11, note 4. 5. See table 11, note 5. . . . Not applicable.
3

217,757 7,396 160,904 146

57,848 945 62,602 17

27 13 39 12

123,940 5,820 86,517 126

19,888 354 11,279 32

16,177 147 10,616 11

81,794 5,184 61,790 83

1,771 1,058 2,568 2

2.2 20.4 4.2 2.4

44.5 ... 71.0 ...

19.6 ... 16.4 ...

10.1 ... 5.5 ...

11.2 29.1 1.8 ...

9.9 61.8 2.3 100.0

4.7 9.1 3.0 ...

2.6 4.3 2.1 4.8

2.1 4.3 1.8 4.8

3,392 2,625

1,008 1,092

30 42

2,282 1,474

322 227

469 172

1,252 1,047

729 36

58.2 3.4

5.2 83.3

2.6 11.1

5.6 5.6

8.4 ...

10.3 ...

67.9 ...

6.9 1.8

6.5 1.8

35,912 725

7,019 322

20 44

22,454 361

3,355 91

2,372 135

15,514 115

502 11

3.2 9.6

50.6 36.4

18.5 36.4

9.6 9.1

11.4 9.1

6.4 ...

3.6 9.1

2.4 2.6

2.0 2.1

499 90

27 12

5 13

457 77

39 10

35 22

361 42

14 1

3.9 2.4

21.4 100.0

21.4 ...

21.4 ...

35.7 ...

... ...

... ...

2.6 1.5

2.7 1.5

70 3 429,519

2 0 130,894

3 0 30

65 3 243,576

6 1 35,604

10 0 30,166

48 2 167,232

5 1 6,698

10.4 50.0 4.0

... ... 43.9

40.0 ... 13.3

20.0 ... 6.2

40.0 ... 10.1

... 100.0 14.9

... ... 11.5

2.9 4.1 3.1

2.6 4.1 2.2

1. These applications are included in the total reported in table 11.

50

Mortgage Market in 2011

13. Top 10 organizations in terms of first-lien mortgage originations, 2011 versus 2006
Percent except as noted Bank Number of originations Conventional Share of Share of share of home originations originations Market share purchase for home for refinance originations purchase 2011 13.4 31.2 67.1 53.8 6.9 8.1 91.6 57.0 5.1 28.7 69.9 57.6 2.4 24.6 72.4 65.6 2.1 8.4 91.6 42.6 1.7 13.0 84.3 93.6 1.5 26.8 72.4 54.5 1.4 39.2 58.8 49.8 1.2 16.6 80.7 83.1 1.2 36.1 63.9 69.1 36.9 63.1 8.1 6.5 3.3 3.2 3.0 2.6 2.5 2.3 2.0 1.8 35.2 64.8 23.7 41.7 50.4 58.8 57.5 29.7 44.6 60.9 29.8 41.6 30.2 27.7 46.7 50.9 74.9 55.4 45.9 37.0 34.9 64.4 52.1 36.5 66.0 58.3 62.3 58.0 48.5 45.8 57.4 56.7 2006 92.1 89.7 97.7 95.6 91.1 92.1 98.7 92.1 97.0 95.5 92.9 91.8 Conventional share of refinance originations 87.2 97.2 88.6 92.3 64.2 96.1 92.2 82.0 94.0 92.8 89.3 86.3 98.6 96.2 99.1 99.5 98.0 94.2 98.9 97.7 98.5 99.4 98.1 97.2 Share of Number of conventional loan loans held in purchases portfolio1 7.6 3.5 13.9 39.2 .2 47.6 30.0 .7 2.2 5.9 11.9 36.3 3.7 25.5 45.1 51.5 6.3 4.3 42.6 2.3 52.1 47.7 23.8 27.7 845,871 300,092 442,416 114,128 0 252,128 15,014 32,249 431,925 31,433 2,465,256 479,406 1,409,623 411,346 193,761 61,525 204,632 6,206 415,199 862,978 616,319 306,585 4,488,174 1,748,178 Share of purchases held in portfolio 24.1 18.5 21.6 14.9 n.a. 8.0 7.1 26.2 4.9 63.3 18.0 21.6 7.7 13.7 65.8 59.0 39.1 .0 17.0 17.8 51.7 65.3 25.7 38.8

1. Wells Fargo & Co. 2. JPMorgan Chase & Co. 3. Bank of America Corp. 4. U.S. Bancorp 5. Quicken Loans, Inc. 6. Citigroup 7. Fifth Third Bancorp 8. Flagstar Bank, FSB 9. Ally Financial 10. Suntrust Bank Top 10 organizations All other organizations 1. Countrywide 2. Wells Fargo & Co. 3. Bank of America Corp. 4. Wachovia Corp. 5. JPMorgan Chase & Co. 6. National City Corp. 7. Washington Mutual Bank, FSB 8. GMAC Bank 9. Citigroup 10. HSBC Holdings, PLC Top 10 organizations All other organizations

908,962 470,760 343,471 164,937 143,870 113,468 101,956 92,875 83,123 80,375 2,503,797 4,284,175 872,732 697,593 356,300 341,218 317,755 278,426 270,278 248,050 215,454 194,308 3,792,114 6,979,080

1. Refers to loans held beyond the year of origination; excludes loans originated during the last quarter of the year. n.a. Not available.

51

Mortgage Market in 2011

14. Home lending to different populations, by type and purpose of the loan, 201011
2010 Borrower race/ethnicity and income, and census-tract minority status and median income MEMO: Number of loans 2011 MEMO: Percentage change in MEMO: number of Number of loans, loans 201011

Conventional

Nonconventional

Total

Conventional

Nonconventional1

Total

A. Home purchase Minority status American Indian or Alaska Native Asian Black or African American Native Hawaiian or other Pacific Islander Hispanic white Non-Hispanic white Borrower income 3 Low Moderate Middle High Racial or ethnic composition (minorities as a percent of population) Less than 10 1049 5079 80100 Income ratio (percent of area median) 4 Low Moderate Middle High 39.0 35.6 41.6 57.5 61.0 64.4 58.4 42.5 100 100 100 100 22,776 218,370 1,002,433 719,769 44.3 39.3 44.1 60.2 B. Refinance Minority status American Indian or Alaska Native Asian Black or African American Native Hawaiian or other Pacific Islander Hispanic white Non-Hispanic white Borrower income 3 Low Moderate Middle High Racial or ethnic composition (minorities as a percent of population) Less than 10 1049 5079 80100 87.5 84.4 81.0 71.5 12.5 15.6 19.0 28.5 100 100 100 100 1,811,070 1,799,158 221,942 101,821 88.7 85.9 83.5 77.0 11.3 14.1 16.5 23.0 100 1,493,311 100 1,557,447 100 202,344 100 93,542 -17.5 -13.4 - 8.8 - 8.1 53.9 85.5 87.6 93.2 46.1 14.5 12.4 6.8 100 100 100 100 550,215 566,220 895,581 1,921,975 62.6 88.1 89.3 93.9 37.4 11.9 10.7 6.1 100 565,435 100 473,018 100 724,180 100 1,584,011 2.8 -16.5 -19.1 -17.6
2 2

33.8 73.4 18.9 32.4 26.5 50.3

66.2 26.6 81.1 67.6 73.5 49.7

100 100 100 100 100 100

11,183 119,762 133,969 7,671 207,108 1,504,464

36.5 74.3 21.6 35.1 29.2 53.3

63.5 25.7 78.4 64.9 70.8 46.7

100 100 100 100

9,435 104,626 113,591 6,661

-15.6 -12.6 -15.2 -13.2 - 5.5 - 5.8

100 195,778 100 1,417,339

38.0 35.0 41.5 62.7

62.0 65.0 58.5 37.3

100 100 100 100

259,194 506,389 509,365 709,209

39.5 37.1 43.9 65.8

60.5 62.9 56.1 34.2

100 100 100 100

235,117 454,711 468,122 689,480

- 9.3 -10.2 - 8.1 - 2.8

53.9 45.1 37.1 31.0

46.1 54.9 62.9 69.0

100 100 100 100

739,164 972,504 173,454 99,035

56.0 48.2 40.4 33.2

44.0 51.8 59.6 66.8

100 100 100 100

704,743 904,619 149,078 88,990

- 4.7 - 7.0 -14.1 -10.1

55.7 60.7 55.9 39.8

100 100 100 100

18,491 185,370 933,555 697,955

-18.8 -15.1 - 6.9 - 3.0

76.8 95.3 58.1 75.5 75.1 86.3

23.2 4.7 41.9 24.5 24.9 13.7

100 100 100 100 100 100

11,981 232,177 129,828 9,925 190,507 3,359,573

77.6 95.8 62.5 77.3 79.0 87.7

22.4 4.3 37.6 22.8 21.0 12.3

100 100 100 100

10,991 204,917 119,267 8,595

- 8.3 -11.7 - 8.1 -13.4 - 7.4 -15.9

100 176,431 100 2,826,443

52

Mortgage Market in 2011

14. Home lending to different populations, by type and purpose of the loan, 201011 (continued)
Borrower race/ethnicity and income, and census-tract minority status and median income Income ratio (percent of area median) 4 Low Moderate Middle High 2010 Conventional Nonconventional1 Total MEMO: Number of loans Conventional 2011 Nonconventional1 Total MEMO: Percentage MEMO: Number of change in number of loans

73.6 76.6 82.3 89.8

26.4 23.4 17.7 10.2

100 100 100 100

19,669 262,071 1,848,197 1,777,129

79.7 80.4 84.1 90.7

20.3 19.6 15.9 9.3

100 17,304 100 230,055 100 1,571,451 100 1,507,179

-12.0 -12.2 -15.0 -15.2

C. Home improvement5 Minority status 2 American Indian or Alaska Native Asian Black or African American Native Hawaiian or other Pacific Islander Hispanic white Non-Hispanic white Borrower income 3 Low Moderate Middle High Racial or ethnic composition (minorities as a percent of population) Less than 10 1049 5079 80100 Income ratio (percent of area median) 4 Low Moderate Middle High
1. See table 4, note 1. 2. Categories for race and ethnicity reflect the revised standards established in 1997 by the Office of Management and Budget. Applicants are placed under only one category for race and ethnicity, generally according to the race and ethnicity of the person listed first on the application. However, under race, the application is designated as joint if one applicant reported the single designation of white and the other reported one or more minority races. If the applications is not joint but more than one race is reported, the following designations are made: If at least two minority races are reported, the application is designated as two or more minority races ; if the first person listed on an application reports two races, and one is white, the application is categorized under the minority race. For loans with two or more applicants, lenders covered under the Home Mortgage Disclosure Act report data on only two. 3. The income category of a borrower is relative to the median family income of the area (metropolitan statistical area (MSA) or statewide non-MSA) in which the property being purchased is located, and the income category of a census tract is the median family income of the tract relative to that of the area (MSA or statewide non-MSA) in which the tract is located: Low is less than 50 percent of the median; moderate is 50 percent to 79 percent (in this article, lower income encompasses the low and moderate categories); middle is 80 percent to 119 percent; and high is 120 percent or more. 4. The income category of a census tract is the median family income of the tract relative to that of the metropolitan statistical area (MSA) or statewide non-MSA in which the tract is located. Low is less than 50 percent of the median; moderate is 50 percent to 79 percent; middle is 80 percent to 119 percent; and high is 120 percent or more. 5. Regardless of lien status.

96.2 98.0 91.3 95.9 95.2 96.4

3.8 2.0 8.7 4.1 4.8 3.6

100 100 100 100 100 100

1,749 5,771 17,993 764 19,935 238,623

96.7 97.4 93.0 95.9 95.8 96.6

3.3 2.6 7.0 4.1 4.2 3.4

100 100 100 100 100 100

1,787 5,857 17,964 752 20,733 227,534

2.2 1.5 - .2 - 1.6 4.0 - 4.6

93.6 96.1 96.1 97.0

6.4 3.9 3.9 3.0

100 100 100 100

42,874 58,085 70,739 113,137

94.5 96.5 96.2 96.9

5.5 3.5 3.8 3.1

100 100 100 100

41,436 55,914 67,718 109,559

3.4 3.7 4.3 3.2

97.0 95.4 94.9 92.6

3.0 4.6 5.1 7.4

100 100 100 100

147,435 104,339 15,657 17,404

97.1 95.9 95.0 94.2

2.9 4.1 5.0 5.8

100 100 100 100

140,370 101,140 15,184 17,933

- 4.8 - 3.1 - 3.0 3.0

91.6 94.9 96.0 96.7

8.4 5.1 4.0 3.3

100 100 100 100

2,901 33,355 162,417 81,722

91.9 95.4 96.3 96.9

8.1 4.6 3.7 3.1

100 100 100 100

2,870 32,080 155,288 80,110

1.1 3.8 4.4 2.0

NOTE: One- to four-family and manufactured housing, first liens, and owner-occupied only.

53

Mortgage Market in 2011

15. Loan characteristics related to lending in areas grouped by Neighborhood Stabilization Program score, 2011
Percent change in home-purchase lending from 2010 to 2011 Characteristic MEMO Loans Applications Borrower Income ratio (percent of area median)2 Lower Middle High Minority3 Originating institution Bank Thrift Credit union Independent mortgage bank -7.4 -8.4 -1.6 -4.7 -9.6 -10.4 -5.1 -10.1 -11.4 -12.2 -6.8 -11.2 -13.6 -12.9 -5.1 -13.1 -19.6 -16.5 -5.7 -14.8 -12.3 -11.3 -3.8 -10.1 14 -3.3 -3.9 58 -7.1 -7.3 NSP score1 912 1316 -9.3 -9.0 -9.9 -10.1 1720 -13.8 -15.4 All -7.2 -7.8

-2.9 -20.2 6.6 4.6

-7.0 -28.1 10.8 -.6

-9.7 -30.2 9.2 -3.2

-10.3 -26.4 8.9 -6.4

-17.6 -18.0 11.2 -11.2

-7.1 -24.1 8.5 -2.3

Top 10 organization -14.4 -16.6 -19.3 -18.5 -22.6 -17.1 Non-top-10 organization 2.6 -2.9 -4.9 -6.1 -9.9 -2.6 NOTE: First and junior liens for owner-occupied, one- to four-family properties or manufactured housing in metropolitan areas. Data are the percent change in the dollar value of lending.
1. The Neighborhood Stabilization Program (NSP) score is based on the NSP3 score created by the Department of Housing and Urban Development. The NSP score classifies census tracts into 5 percent "buckets" on a range of 1 to 20, with 1 being the best tracts and 20 being the worst in terms of a variety of factors, such as foreclosure rates. NSP scores determine eligibility for NSP funding; census tracts with the highest scores are considered the tracts with the greatest need for support. See text for further details. 2. Borrower income is the total income relied upon by the lender in the loan underwriting. Income is expressed relative to the median family income of the metropolitan statistical area (MSA) or statewide non-MSA in which the property being purchased is located. "Lower" is less than 80 percent of the median; "middle" is 80 percent to 119 percent; and "high" is 120 percent or more. 3. See table 14, note 2. Minority borrowers are borrowers other than non-Hispanic whites.

SOURCE: Department of Housing and Urban Development; Federal Financial Institutions Examination Council, data reported under the Home Mortgage Disclosure Act.

54

Mortgage Market in 2011

16. Incidence of higher-priced lending, unmodified and modified for borrower- and lender-related factors, by type and purpose of the loan and by race, ethnicity, and sex of borrower, 2011 A. Conventional loan
Percent except as noted Number of loans Modified incidence, by modification factor Unmodified Borrowerincidence Borrowerrelated plus related lender Home purchase 7.85 1.32 7.84 2.76 2.28 2.91 1.67 4.42 3.28 6.52 3.98 3.12 4.17 2.78 4.14 3.70 4.69 4.23 3.87 4.16 3.90 Number of loans Modified incidence, by modification factor Unmodified Borrowerincidence Borrowerrelated plus related lender Refinance 3.14 .31 4.21 1.18 .85 .97 .74 2.46 .93 3.19 1.88 2.06 1.67 1.09 1.82 1.48 2.36 2.26 1.96 1.72 1.64

Race, ethnicity, and sex

Race other than white only 1 American Indian or Alaska Native Asian Black or African American Native Hawaiian or other Pacific Islander Two or more minority races Joint Missing White, by ethnicity 1 Hispanic white Non-Hispanic white 43,569 736,713 7.25 3.85 5.68 3.85 4.40 3.85 110,493 2,496,791 2.41 1.62 2.09 1.62 2.00 1.62 2,905 77,211 21,655 2,285 395 15,158 84,659 8,313 195,610 73,397 6,593 1,405 48,823 339,272

Sex One male 274,116 3.92 3.92 3.92 655,790 1.79 1.79 1.79 One female 192,796 3.55 3.27 3.63 522,500 1.99 1.70 1.72 Two males 10,304 7.00 7.00 7.00 22,219 2.00 2.00 2.00 Two females 7,924 4.76 5.41 6.97 22,594 2.07 1.77 2.16 NOTE: First-lien mortgages for owner-occupied, one- to four-family, site-built properties; excludes business loans. Business-related loans are those for which the lender reported that the race, ethnicity, and sex of the applicant or co-applicant are not applicable. For definition of higherpriced lending and explanation of modification factors, see text and table 9, note 3. Loans taken out jointly by a male and female are not tabulated here because they would not be directly comparable with loans taken out by one borrower or by two borrowers of the same sex.
1. See table 14, note 2.

55

Mortgage Market in 2011

16. Incidence of higher-priced lending, unmodified and modified for borrower- and lender-related factors, by type and purpose of the loan and by race, ethnicity, and sex of borrower, 2011 B. Nonconventional loan
Percent except as noted Number of loans Modified incidence, by modification factor Unmodified Borrowerincidence Borrowerrelated plus related lender Home purchase 2.78 2.09 4.16 2.64 .88 1.75 2.89 2.91 2.01 3.53 2.46 1.35 2.37 3.57 2.09 2.02 3.10 2.57 1.59 2.51 2.30 Number of loans Modified incidence, by modification factor Unmodified Borrowerincidence Borrowerrelated plus related lender Refinance 5.02 4.03 10.80 3.50 4.55 2.67 2.32 3.74 3.92 7.33 3.58 5.33 4.50 3.06 2.83 4.06 5.24 4.06 4.21 4.58 4.64

Race, ethnicity, and sex

Race other than white only American Indian or Alaska Native Asian Black or African American Native Hawaiian or other Pacific Islander Two or more minority races Joint Missing White, by ethnicity Hispanic white Non-Hispanic white Sex One male One female Two males Two females NOTE: See notes to table 16.A.

5,754 26,746 87,774 4,288 681 15,364 74,377

2,312 8,577 44,070 1,913 308 9,617 55,264

120,229 660,368

4.78 2.35

2.79 2.35

2.59 2.35

28,384 344,076

6.50 5.94

4.20 5.94

4.23 5.94

359,311 234,298 13,567 10,629

2.91 3.89 2.94 3.24

2.91 2.92 2.94 3.36

2.91 2.91 2.94 3.54

147,966 81,252 3,692 3,261

4.72 12.04 2.76 4.60

4.72 6.03 2.76 4.07

4.72 5.56 2.76 4.66

56

Mortgage Market in 2011

17. Mean average prime offer rate spreads, unmodified and modified for borrower- and lender-related factors, for higher-priced loans on one- to four-family homes, by type and purpose of the loan and by race, ethnicity, and sex of borrower, 2011 A. Conventional loan
Percent except as noted Number of Unmodified higher-priced mean spread loans1 Modified mean spread, by Modified mean spread, by Number of modification factor modification factor Unmodified higher-priced BorrowerBorrowermean spread BorrowerBorrowerloans1 related plus related plus related related lender lender Home purchase Refinance 2.80 2.49 2.67 2.95 3.61 2.48 2.29 2.70 2.46 2.54 2.63 2.52 2.49 2.48 261 601 3,087 78 12 476 2,514 2.71 2.43 2.99 2.42 1.98 2.48 2.52 2.55 2.36 2.91 2.62 2.34 2.56 3.13 2.58 2.49 2.66 2.61 2.67 2.56 2.56

Race, ethnicity, and sex

Race other than white only 2 American Indian or Alaska Native Asian Black or African American Native Hawaiian or other Pacific Islander Two or more minority races Joint Missing White, by ethnicity 2 Hispanic white Non-Hispanic white

228 1,016 1,698 63 9 441 1,415

2.93 2.41 2.49 2.26 2.68 2.49 2.29

3,160 28,356

2.76 2.49

2.71 2.49

2.55 2.49

2,660 40,456

2.84 2.53

2.56 2.53

2.55 2.53

Sex One male 9,073 2.54 2.54 2.54 10,679 2.72 2.72 2.72 One female 5,767 2.48 2.48 2.51 9,937 2.80 2.73 2.72 Two males 721 2.58 2.58 2.58 445 2.54 2.54 2.54 Two females 377 2.55 2.51 2.52 467 2.68 2.56 2.49 NOTE: For definition of higher-priced lending and explanation of modification factors, see text. Loans taken out jointly by a male and female are not tabulated here because they would not be directly comparable with loans taken out by one borrower or by two borrowers of the same sex. For definition of average prime offer rate spread, see table 11, note 1.
1. See table 9, note 3. 2. See table 14, note 2.

57

Mortgage Market in 2011

17. Mean average prime offer rate spreads, unmodified and modified for borrower- and lender-related factors, for higher-priced loans on one- to four-family homes, by type and purpose of the loan and by race, ethnicity, and sex of borrower, 2011 B. Nonconventional loan
Percent except as noted Number of Unmodified higher-priced mean spread loans1 Modified mean spread, by Modified mean spread, by Number of modification factor modification factor Unmodified higher-priced BorrowerBorrowermean spread BorrowerBorrowerloans1 related plus related plus related related lender lender Home purchase Refinance 1.91 1.96 1.93 1.95 1.89 2.00 2.18 1.95 1.93 1.96 1.95 2.01 1.97 1.98 116 346 4,758 67 14 257 1,281 2.49 2.35 2.63 2.44 2.25 2.36 3.33 2.50 2.30 2.55 2.47 2.23 2.59 4.42 2.53 2.38 2.49 2.24 2.22 2.45 2.32

Race, ethnicity, and sex

Race other than white only 2 American Indian or Alaska Native Asian Black or African American Native Hawaiian or other Pacific Islander Two or more minority races Joint Missing White, by ethnicity 2 Hispanic white Non-Hispanic white Sex One male One female Two males Two females NOTE: See notes to table 17.A.

160 558 3,651 113 6 269 2,151

1.78 2.10 1.94 1.91 2.07 1.97 2.21

5,749 15,531

1.88 1.96

1.92 1.96

1.96 1.96

1,845 20,442

2.47 2.44

2.39 2.44

2.44 2.44

10,449 9,114 399 344

1.93 1.99 1.90 1.85

1.93 1.95 1.90 1.84

1.93 1.93 1.90 1.92

6,977 9,785 102 150

2.60 2.63 2.17 2.30

2.60 2.65 2.17 2.16

2.60 2.64 2.17 2.23

58

Mortgage Market in 2011

18. Denial rates on applications, unmodified and modified for borrower- and lender-related factors, by type and purpose of the loan and by race, ethnicity, and sex of applicant, 2011 A. Conventional loan application
Percent except as noted Number of applications Unmodified acted upon by denial rate lender Modified denial rate, by modification factor Borrowerrelated Borrowerrelated plus lender Number of applications Unmodified acted upon by denial rate lender Modified denial rate, by modification factor Borrowerrelated Borrowerrelated plus lender

Race, ethnicity, and sex

Home purchase Race other than white only American Indian or Alaska Native Asian Black or African American Native Hawaiian or other Pacific Islander Two or more minority races Joint Missing White, by ethnicity 1 Hispanic white Non-Hispanic white
1

Refinance 16.1 13.5 21.3 15.1 19.7 12.9 14.9 14,554 266,844 138,918 10,738 2,349 65,079 529,019 36.2 19.3 40.5 31.9 32.8 18.7 29.2 35.0 23.1 36.3 31.6 36.7 23.5 28.6 28.8 23.4 32.1 28.6 31.3 22.1 24.4

4,165 99,848 34,475 3,130 576 18,679 115,081

23.8 14.8 30.9 20.3 24.0 12.1 18.6

21.3 14.8 24.2 16.1 24.7 14.3 18.7

60,885 894,159

21.7 11.9

16.2 11.9

15.7 11.9

179,810 3,362,076

32.0 20.0

28.5 20.0

26.6 20.0

Sex One male 353,445 16.0 16.0 16.0 987,535 26.7 26.7 26.7 One female 245,656 15.6 14.3 14.8 767,689 25.8 24.4 24.6 Two males 13,586 17.9 17.9 17.9 31,981 24.5 24.5 24.5 Two females 10,332 17.6 15.3 14.5 32,124 24.0 23.5 23.7 NOTE: First-lien mortgages for owner-occupied, one- to four-family, site-built properties; excludes business loans. Business-related loans are those for which the lender reported that the race, ethnicity, and sex of the applicant or co-applicant are not applicable. For explanation of modification factors, see text. Applications made jointly by a male and female are not tabulated here because they would not be directly comparable with applications made by one applicant or by two applicants of the same sex.
1. See table 14, note 2.

59

Mortgage Market in 2011

18. Denial rates on applications, unmodified and modified for borrower- and lender-related factors, by type and purpose of the loan and by race, ethnicity, and sex of applicant, 2011 B. Nonconventional loan application
Percent except as noted Number of applications Unmodified acted upon by denial rate lender Modified denial rate, by modification factor Borrowerrelated Borrowerrelated plus lender Number of applications Unmodified acted upon by denial rate lender Modified denial rate, by modification factor Borrowerrelated Borrowerrelated plus lender

Race, ethnicity, and sex

Home purchase Race other than white only American Indian or Alaska Native Asian Black or African American Native Hawaiian or other Pacific Islander Two or more minority races Joint Missing White, by ethnicity 1 Hispanic white Non-Hispanic white Sex One male One female Two males Two females NOTE: See notes to table 18.A.
1

Refinance 18.0 15.6 19.2 17.4 18.5 13.4 18.0 4,115 14,906 83,469 3,165 632 14,265 110,551 35.6 32.6 38.9 30.5 39.6 24.6 42.6 37.7 33.6 39.6 33.1 39.8 32.0 40.9 32.6 32.3 36.5 32.5 31.0 31.0 31.1

7,408 35,278 120,493 5,554 939 18,604 101,560

16.7 18.6 22.0 17.2 20.0 12.3 20.7

18.8 17.1 20.2 17.4 19.5 14.3 21.4

157,053 796,284

17.9 12.7

15.9 12.7

15.6 12.7

48,034 538,897

31.4 28.9

33.0 28.9

32.3 28.9

453,381 295,544 18,167 13,935

15.9 16.0 20.0 18.9

15.9 14.7 20.0 17.1

15.9 15.0 20.0 17.8

253,578 144,648 6,151 5,598

33.8 36.3 30.9 33.5

33.8 32.6 30.9 29.3

33.8 32.5 30.9 30.1

60

Mortgage Market in 2011

19. Effect of the transition to updated census data on classification of census tracts, home lending, and branch offices, by census-tract relative income
Census-tract relativeincome reclassifications1 Low to low Low to moderate Low to middle Low to high MEMO: Totals Moderate to low Moderate to moderate Moderate to middle Moderate to high MEMO: Totals Middle to low Middle to moderate Middle to middle Middle to high MEMO: Totals Upper to low Upper to moderate Upper to middle Upper to high MEMO: Totals 2000 census to 200509 ACS Census tracts Loans Branch offices Number Percent Number Percent Number Percent 2,888 74 40,675 64 1,966 63 860 22 16,682 26 718 23 110 3 2,910 5 157 5 44 1 2,856 5 260 8 3,902 100 63,123 100 3,101 100 2,323 9,208 2,411 153 14,095 108 4,777 23,710 3,359 31,954 8 36 2,664 11,907 14,615 16 65 17 1 100 0 15 74 11 100 0 0 18 81 100 56,946 410,331 151,120 11,099 629,496 2,430 314,565 2,590,180 500,753 3,407,928 64 1,342 380,064 2,515,553 2,897,023 9 65 24 2 100 0 9 76 15 100 0 0 13 87 100 2,078 10,624 3,171 268 16,141 159 6,993 37,884 5,360 50,396 21 71 4,516 22,791 27,399 13 66 20 2 100 0 14 75 11 100 0 0 16 83 100 2000 census to 200610 ACS Census tracts Loans Branch offices Number Percent Number Percent Number Percent 2,213 76 31,483 64 1,486 68 624 21 13,270 27 478 22 58 2 2,441 5 118 5 21 1 1,930 4 107 5 2,916 100 49,124 100 2,189 100 1,955 7,060 1,813 100 10,928 80 3,784 17,496 2,577 23,937 0 23 2,076 8,750 10,849 18 65 17 1 100 0 16 73 11 100 0 0 19 81 100 47,304 301,313 104,672 8,766 462,055 1,795 237,760 1,696,802 313,465 2,249,822 0 1,042 253,190 1,530,101 1,784,333 10 65 23 2 100 0 11 75 14 100 0 0 14 86 100 1,622 7,912 2,139 155 11,828 113 4,967 25,712 3,588 34,380 0 47 3,052 14,399 17,498 14 67 18 1 100 0 14 75 10 100 0 0 17 82 100

NOTE: For an explanation of the transition to updated census data, see the text discussion Transition to the 2010 Census Data and Revised Census-Tract Boundaries. Census tracts are as defined in the 2000 and 2010 decennial censuses. Census-tract locations of properties related to home loans are from the 2011 Home Mortgage Disclosure Act data. Branch office locations are derived from the Summary of Deposits as of June 30, 2011. 1. For definitions of census-tract income categories, see table 14, note 4. ACS American Community Survey.

61

Mortgage Market in 2011

1. Volume of home-purchase and refinance originations and average prime offer rate, by month, 200611
Thousands of loans Percentage points

800
APOR (right scale) Refinance (left scale)

600 6

400

5 200
Home purchase (left scale)

0
2006 2007 2008 2009 2010 2011

NOTE: The data are monthly. Loans are first- and second-lien mortgages excluding those for multifamily housing. The average prime offer rate (APOR) is published weekly by the Federal Financial Institutions Examination Council. It is an estimate of the annual percentage rate on loans being offered to high-quality prime borrowers based on the contract interest rates and discount points reported by Freddie Mac in its Primary Mortgage Market Survey (www.ffiec.gov/ratespread/newcalc.aspx).

62

Mortgage Market in 2011

2. Credit scores of home-purchase borrowers, 19992011

Credit score 850 800 750 700 650 600 550 500 Credit score 850 800 750 700 650 600 550 500 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

A. All borrowers
Credit score percentile 10th 25th Median 75th 90th

B. First-time borrowers

SOURCE: Data for both graphs are from the FRBNY/Equifax Consumer Credit Panel. Credit score is the Equifax Risk Score 3.0.

63

3. Average HMDA income relative to average homebuyer income from the U.S. census and the American Community Survey Percent

Mortgage Market in 2011

2000 census

Less than 90 90-109.99 110-129.99

130 or more

Insufficient data

2005-06 ACS

2009-10 ACS

Source: Federal Financial Institutions Examination Council, data reported under the Home Mortgage Disclosure Act; Census Bureau.

64 (LAST PAGE)