The Federal Financial Institutions Examination Council recently released a treasure trove of data on mortgage lending transactions at U.S. financial institutions covered by the Home Mortgage Disclosure Act in 2014.
The data include applications, originations, purchases and sales of loans, denials and other actions from more than 7,000 banks, savings associations, credit unions and mortgage companies, as well as disclosure statements, aggregate data for each metropolitan statistical area (MSA), nationwide summary statistics on lending patterns, and Loan/Application Registers (LARs).
Fair Lending by the Numbers
Compiled using census tract delineations, population and housing characteristic data from the 2010 Census and the combined 2006-2010 American Community Surveys, the data released by the FFIEC include some interesting insights for compliance officers and fair lending professionals.
For instance, regulators might be pleased that from 2013 to 2014, loans made to both Black and Hispanic borrowers were on the upswing. The share of mortgages made to Black borrowers rose from 4.4 to nearly 4.9 percent, and the share made to Hispanic borrowers rose from 6.9 percent to 7.5.
In other areas, though, the numbers may point to trends regulators could find problematic. The share of loans made to low-and moderate-income borrowers (borrowers with an income less than 80 percent of area median income) declined slightly from 26 percent in 2013 to 25 percent in 2014.
In addition, in 2014, Black and Hispanic applicants experienced higher denial rates than non-Hispanic white applicants, and the number of loans classified as higher-priced loans (that is, loans with annual percentage rates that exceed the average prime offer rates by at least 1.5 percentage points for first-lien loans and at least 3.5 percentage points for subordinate lien loans) were up to 3 percent from the year before.
What Does This Mean?
Regulators may find the increase in loans to Black and Hispanic borrowers promising. But the DOJ, CFPB and other regulatory agencies have made clear they have no intention of relaxing their scrutiny any time soon.
The only way to ensure your institution stays clear of regulatory trouble is a robust and consistent fair lending monitoring program. For help or advice on how your institution can best implement or strengthen your monitoring program, please give Preiss&Associates a call.