Minority-owned institutions might be expected to show different lending patterns than majority-owned ones. And they do. But some of them are patterns you might not expect. They do lend a lot (more than a third of their volume) to minorities. But they vary considerably from Census Bureau reckoning of minority percentages. And they make a lot of loans to investors and high-income customers, with jumbo loans comprising more than half their volumes and a lot of multifamily mortgages as well.
A LendingPatterns™ sort of minority-owned mortgage lenders comes up with 64 institutions responsible for $2.2 billion in finance for 2014. They made 34.3 percent of their mortgage dollar volume to minorities.
The U.S. Census Bureau says minorities made up 39.9 percent of the total populations as of July 1, 2014. So far, a pretty tight correspondence. But there is quite a variation between the Census Bureau and HMDA numbers if you look a little closer.
So, the Census Bureau counts Hispanics as the largest minority group in the country, at 17.4 percent of population. But the bulk of loans made by minority-owned institutions went to Asians, at 19.8 percent. Blacks, the next largest Census cohort, made up 13.2 percent of the population on July 1, 2014. But they received only five percent of minority institution lending. In fact, you have to scroll down to Native Hawaiians to find a closely-matched category. Native Hawaiians (this group also includes natives of other U.S.-controlled Pacific islands like Guam and American Samoa) made up 0.2 percent of population, and got 0.17 percent of loans.
Hispanics got 8.28 percent of fundings, about half their proportion in the general populations.
As for whites, they received 23 percent of mortgage money, well below their representation in the population. But 41 percent of minority institution mortgage dollars were assigned to the “NA” category, so the actual number is going to be somewhat higher than that.
The minority-owned institutions approved 66.3 percent of all applications, LendingPatterns™ data showed. Some 14 percent of apps was denied, with the balance being withdrawn, deemed incomplete, or having pre-approvals denied or rejected.
Loan type skewed overwhelmingly to conventional, at 95.2 percent, with government mortgages making up the rest. Interestingly, loans for owner-occupied and non-owner-occupied loans were split pretty evenly, meaning a big volume for investment properties.
About 73 percent of 2014 volume went to purchase mortgages, while 22 percent were for refis. Upper-income borrowers made up 38 percent of volume, while only about 16 percent combined went to low-, moderate- and middle-income buyers (there was a large “NA” component here as well).
Very few loans were sold in the secondary market to Freddie Mac and Fannie Mae. About $1.8 billion of loans (82 percent) was not sold at all, while sales to the non-agency market actually topped those to Freddie and Fannie.
More than half of the volume (52 percent) were jumbo loans, mortgages made for more than the GSE limits of $417,000. Average loan size came in below the GSE limit at $346,000.
There was a lot of multifamily mortgage dollars extended, taking up 23 percent of the total.
The Hispanic-owned International Bank of Commerce, Laredo, Texas, is the top lender on the minority-owned list. It reported making $282 million in mortgages in 2014. Hispanic-owned BAC Florida Bank, Coral Gables, was second, at $239 million, while Preferred Bank, Los Angeles, founded as a Chinese-American bank, came in third, at $180 million.
(Mark Fogarty is a journalist and analyst who has been covering the mortgage industry for more than 30 years.)