I have always been interested in rural housing and mortgages, and LendingPatterns™ has a lot of good information on this small niche of the lending business.
There is a category here for “FSA/RHS” which is a combination of two US Department of Agriculture lending programs—the Rural Housing Service and the Farm Services Agency. And you can search for American Indian lending as well, and many Indians live on reservations in rural areas (though this category combines both rural and urban populations).
With the FSA you are getting into farm mortgages, a fascinating niche that is noticeably different from the regular run of mortgages. Farm mortgages, for instance, combine real estate financing with equipment lending. And, unlike urban lending, the value of the land is quite often higher than the value of the improvements.
Some 275,000 potential borrowers applied for RHS/FSA mortgages in 2015, with 118,000 loans originated and another 96,000 purchased (usually meaning coming through the correspondent channel). Less than 10 percent of the applications were denied.
In the secondary market, non-agency investors were dominant, at a 62 percent share of loans. The only other investor with a significant market share was Ginnie Mae, at 31 percent.
Middle-income borrowers rather than the upper-income category dominated, with 38 percent of loans coming from middle-income and another 43 percent from the moderate-income category.
Another unusual feature of this niche is that subordinate liens were larger, on average, than first liens. First liens averaged $141,000 while subordinates were nearly $100,000 more than that, at $234,000. However, there were hardly any subordinate liens—just 186.
Hardly any jumbo mortgages come from this niche, just 230 loans, or 20 basis points share. The balance, 99.8 percent, was in conforming mortgages. Just about all the volume was in purchase mortgages, at 98 percent, and owner-occupied properties had a 99.8 percent share as well.
On the gender rollup (apps with at least one male versus those with females and no males), 27 percent went to women.
Originations were dominated by loans to whites, at 84 percent of mortgages. Hispanics were the minority with the largest share, at seven percent.
On the Native American side, there are two categories: American Indians (which includes Alaska Natives) and Native Hawaiians (which includes Pacific Islanders from territories like Guam and American Samoa).
Native Hawaiians are a smaller cohort than Indians, but they got more mortgage money in 2015 than Indians. They received $6.4 billion in funding, compared to $6.1 billion for Indians, including those who designated themselves Indian by race and Hispanic by ethnicity. Fully 25 percent of dollars went to Indians with Hispanic ethnicity, which is quite common in the Southwest and California. If you don’t include those of Hispanic ethnicity, just $4.5 billion of finance went to Indians
Non-agency investors bought the most of these Indian loans, at 25 percent, followed by Ginnie Mae, at 24 percent.
In this category, the average amount of first liens was nearly five times larger than the average for subordinate liens, at $201,000 to $42,000.
(Mark Fogarty is a journalist and analyst who has been covering the mortgage industry for more than 30 years.)
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