We walk hand-in-hand with our client's to ensure they do not have blind spots...
(PRWEB) September 20, 2012
This week, the Federal Financial Institutions Examination Council (FFIEC) announced the public availability of home mortgage lending data for all of 2011. Lenders are required to collect data on all home mortgage loan transactions as required by the Home Mortgage Disclosure Act (HMDA). This information provides interesting insight into the nation’s home mortgage lending activity.
Using the TRUPOINT Analytics platform, TRUPOINT Partners has reviewed the publically available data and several interesting trends emerge.
- 7,631 lenders reported in 2011. This is a 4% drop from 2010 and a 14.27% drop since 2006. The reduction in reporting institutions can be attributed to the economic downturn, numerous bank failures, and increased consolidation through merger & acquisition activity. Though bank closures have slowed, many anticipate this trend to continue in 2012 and beyond.
- Loan applications fell by 10% in 2011 for a total of 11.7 million HMDA loan applications. These numbers are considerably lower than the 2003 peak when there were over 34 million applications fueled by over 24 million requests for refinancing alone.
- Lenders increased their reliance on FHA (Federal Housing Administration) mortgage insurance to better serve low to moderate income home borrowers since the mortgage crisis. Thirty-one percent (31%) of all first-lien loans were FHA insured in 2011. In comparison, in 2007 only 7% of first-lien loans where FHA backed. FHA mortgage insurance allows lenders to serve borrowers unable to meet conventional underwriting guidelines.
Several additional points worth noting include apparent lending disparities between various borrower types. Black and Hispanic white applicants experienced higher denial rates than white non-Hispanic applicants. This disparity has been consistent in recent years.
However, it is worth noting that denial disparity alone does not indicate discrimination. Several key determinants of credit are not currently included in the HMDA data. These include credit score, loan to value and debt to income. Industry watchers anticipate these data elements will be included in the future and will enable a more accurate determination of lending activity and possible discrimination.
The data indicates the incidence of high priced loans has decreased in recent years. High interest rate loans remain a small portion of first lien loan activity. However, it is worth noting that 82% of conventional first lien loans used to purchase manufactured housing or mobile homes is 1.5% higher than other conventional home property types.
A careful statistical review of the HMDA loan data can identify potential lending disparity and broader trends that can prove useful for lenders and their regulators. TRUPOINT Partners’ web based application, TRUPOINT Analytics, makes it easy for financial institutions to review their loan data as well as conduct peer analysis. Expert built analysis reports enable lenders to identify fair lending focal points instantly.
“We walk hand-in-hand with our client’s to ensure they do not have blind spots when it comes to their HMDA data and Fair Lending compliance,” said Trey Sullivan, President and CEO of TRUPOINT Partners. “Our clients love the clear and insightful reporting delivered through the TRUPOINT Analytics platform coupled with the personal one-on-one review and interpretation of the numbers by our Fair Lending experts”. “We help our clients by indentifying lending disparities in their data, long before the examiners do. The data always reveals “focal points”. Once the focal points are identified, we provide our client’s the guidance they need for fair lending”.
About TRUPOINT Partners: TRUPOINT Partners is an independent regulatory compliance organization actively serving over 500 financial institutions in Fair Lending, HMDA, CRA and related services. The company’s cloud-based TRUPOINT Analytics platform enables financial institution executives to access, within minutes, hundreds of analytics and reports using public, private and proprietary data sets. Visit http://www.trupointpartners.com or call 704-401-1730 for more information.
For more information about TRUPOINT Partners visit http://www.trupointpartners.com or contact Andy Barksdale at 704-944-1031 or abarksdale(at)trupointpartners(dot)com.