The private label securitization market still hasn’t come back to full life, based on the evidence of an early look at 2016 Home Mortgage Disclosure Act data.
LendingPatterns™ Early Look data, which contain more than a third of 2015’s HMDA volume, show that private securitization investors bought just 3,273 loans last year. (The numbers are based on those mortgage lenders that reported their HMDA data to ComplianceTech as of June 29. The full HMDA report published by the Federal Financial Institutions Examination Council, a unit of the Federal Reserve and other agencies, will be available this fall.)
That is about one percent of non-agency investor purchases to date (roughly 340,000), and non-agency volume is just 13 percent of full volume (about 2,700,000 mortgages) so far.
The balance of the non-agency volume was split fairly evenly between commercial banks (115,000), life insurers (123.000), and affiliates and other investors (99,000). These numbers are for originated mortgages and exclude purchased loans.
Loans that went to private security investors by and large did not go to minority borrowers. They had a combined 12.6 percent of volume. Loans to whites made up 63 percent, and a large number was labeled unknown.
A higher percentage (25 percent) went to the low- and moderate- income borrower categories, with less than 50 percent coming from upper income borrowers.
First lien mortgages in this category averaged $299,000, with subordinate liens averaging $58,000.
Mortgages bought by commercial banks went 70 percent to whites, and more than 20 percent to minorities. Nearly 27 percent of bank volume was made to government loan borrowers, with a little more than 73 percent going to conventional borrowers.
Nearly 24 percent of bank volume went to low- and moderate- income borrowers, with 49 percent going to upper income borrowers. First lien loans averaged $268,000, while subordinate ones averaged just $17,000.
Insurers also tilted heavily to loans to whites, with 70 percent of volume. Hispanics were the minority with the highest percentage of loans, 12.75 percent. But insurers differed from banks in that more than 62 percent of loans went to “guvvie” borrowers. Federal Housing Administration loans alone, at 42 percent, outnumbered conventional mortgages, at 38 percent.
Insurer-bought mortgages also had a lower percentage of upper income borrowers, at 39 percent. Low- and moderate- income borrowers made up about 24 percent of this category.
Average loan amounts were $232,000 for first liens and $15,000 for subordinate liens.
Affiliate and other investors bought loans of which 62 percent were made to whites and more than 26 percent to minorities.
First liens in this category averaged $276,000 while subordinate liens averaged $36,000.
All categories showed more lending of the purchased mortgage variety versus refinancings. The affiliates/other investors category, for instance, showed 60 percent purchase loans and 37 percent refis, with the balance going to home improvement loans.
(Mark Fogarty is a journalist and analyst who has been covering the mortgage industry for more than 30 years.)