In an earlier blog I looked at Home Mortgage Disclosure Act volume by minority-owned institutions in 2014. For this one I have tapped LendingPatterns™ to analyze mortgages made to minorities in that year, and a couple of surprising things emerge.
The one that caught my eye the most was the fact that more than half of requests for minority mortgage dollars in 2014 was from upper income borrowers. Low-mod income, which some people assume is where minorities fit in to the picture, is a good bit lower than that.
So, $250 billion of a minority total of $480 billion in mortgage requests came from upper income borrowers, for a total of 52 percent. The percentage of upper income borrowers was even higher, $148 billion, or 58 percent, of the amount actually originated, $256 billion.
But the percentage was a good bit lower when you look at upper income borrowers in terms of the number of apps requested. There, it is only 37 percent. As for the number of originations made, 42 percent of that number was to upper income borrowers.
Looking at dollars only, 16.5 percent of originations went to the low-mod categories. That number was slightly higher, 19 percent of the dollar amount of mortgages applied for.
Another thing that jumped out to me, and it’s good news this time, is the infinitesimally tiny percentage of HOEPA loans made to minorities. HOEPA was passed as a protection against predatory lending to vulnerable populations like minorities, and it appears to be working. In 2014, 99.99 percent of minority apps was in non-HOEPA loans, and just $26 million of $480 billion qualified as HOEPA loans.
Spread reports, another indicator of possible predatory lending, were pretty favorable as well. Spreads on first liens were at 2.22 percent. Spreads on subordinate liens were pretty hefty, at 5.19 percent, but subordinate liens were only 42 basis points of the total dollar amount of mortgages originated, and less than 10 percent of the total spreads were reported.
Lenders granted $256 billion in mortgages to minorities in 2014, a touch above 53 percent of dollars applied for. Asians edged out Hispanics for most funding: 39 percent for Asians, 36 percent for Hispanics. Blacks came in third at 20%, while Native American and multiracial apps made up about five percent of the total. This shows the fast growth of the Hispanic population in the country, and bears watching for in upcoming years.
Thirty percent of minority mortgage app dollars were for government loans in 2014. Not many investor mortgages, though, at about nine percent non-owner-occupied.
Three quarters of minority dollar mortgages originated were sold in the secondary markets. Of those that were, non-agencies had the highest share, at 28 percent. Most was conforming, with only 25 percent jumbos.
Perhaps going against perceptions, few minorities sought loans on manufactured housing, only one percent of all apps. Just about all of it is in the one-to-four-family property category. Multifamily mortgages had a tiny 30 basis point share.
Mortgage amounts averaged $231,000 for first liens, $40,000 for subordinate liens.
It will be interesting to see what the 2015 HMDA numbers are for this category. Late September is when we will be able to see.
(Mark Fogarty is a journalist and analyst who has been covering the mortgage industry for more than 30 years.)