HMDA Data Shows Decline in Low-Income Lending

Newly released mortgage data shows lending to low- and moderate-income borrowers declined last year, while fewer borrowers took advantage of government-backed mortgage programs.

According to information released Monday by the Federal Financial Institutions Examination Council (FFIEC), the share of home purchase loans made to low- and moderate-income applicants declined to 26 percent in 2013 from 31 percent the year prior. The share of refinance loans going to those borrowers came up just slightly, rising to 20 percent from 19 percent in 2012.

The figures include loans for one- to four-family properties.

FFIEC's data comes from reports made by lenders under the Home Mortgage Disclosure Act (HMDA), which last year covered nearly 14 million home loan applications and 2.8 million loan purchases.

Among other findings taken from the HMDA reporting, FFIEC noted less than a quarter of first-lien home purchase loans made last year were insured by the Federal Housing Administration (FHA) down from 31 percent in 2012 and a peak of 42 percent in 2009.

At the same time, the share of loans guaranteed by the Department of Veterans Affairs (VA) held steady at around 9 percent.

"Following the recent financial crisis, homebuyers relied heavily on government-backed mortgages, particularly those insured by the FHA or guaranteed by the VA, to finance their purchases, but this reliance has declined somewhat in recent years," FFIEC said.

The council also reported continued elevated denial rates for certain minority borrowers, particularly black and Hispanic applicants. According to the report, the share of purchase loans for properties made to black and Hispanic white borrowers declined from 2012 to 2013, while the share made to Asian borrowers increased slightly. The opposite was true for refinance loans.

"These relationships are similar to those found in earlier years," FFIEC said.

In total, the number of originated loans of all types and purposes and to all borrowers in 2013 fell by nearly 1.1 million, or 11 percent, from 2012. The decline reflects a 13 percent increase in home purchase lending offset by a 23 percent drop in refinancing.