Tables are in Portable Document Format (PDF).
The following nationwide summary statistics are based on data compiled by the Federal Financial Institutions Examination Council (FFIEC) for institutions covered by the Home Mortgage Disclosure Act. 1
For 2002, the FFIEC prepared 57,429 disclosure statements for 7,771 lenders, with a separate statement for each metropolitan area in which a lender had an office or could be deemed to have an office under Regulation C, based on the number of applications and loans (Table 1). The data reflect the lending activity of 4,026 commercial banks; 671 savings associations; 1,795 credit unions; and 1,279 mortgage companies (of which 1,004 were independent mortgage companies).
Applications Received and Loans Made
In 2002, lenders covered by HMDA reported a total of about 31 million loans and applications that did not result in an origination (Table 1). The total volume of reported home loan applications and purchases increased in 2002 by 13 percent from 2001, primarily due to a significant increase (22 percent) in refinancing activity (Tables 1 and 2). The 2002 data show that lenders acted on approximately 26 million applications for home purchase loans, home improvement loans, and refinancings (compared with approximately 24 million in 2001), and they purchased about 5 million loans (compared with 4 million in 2001). The number of applications for home purchase loans in 2002 increased from 2001 levels by 3 percent.
Requests for refinancings accounted for 66 percent of all home loan applications (data not shown in tables). This proportion is higher than in 2001, when applications for refinancings accounted for about 60 percent of all applications. The increased volume and share of applications for refinancings resulted primarily from a sharp drop in interest rates on mortgage loans.
Loan Programs and Changes in Lending Volume by Race and Income
Lending institutions tend to specialize in different types of home loans. For example, in the case of home purchase loans, mortgage companies tend to do most of the government-backed lending, including FHA and VA loans, accounting for about 84 percent of all such originations in 2002. Depository institutions, particularly commercial banks, do most of the home improvement (87 percent) and multifamily lending (90 percent). (Data not shown in tables.)
Applications for different types of home purchase loans vary across racial and ethnic groups and income categories (Table 2). For example, in 2002, 27 percent of Hispanic applicants and 28 percent black applicants for home purchase loans applied for government-backed mortgages; the comparable rates for Asians, whites, and Native Americans were 6 percent, 14 percent, and 19 percent, respectively. Moreover, 25 percent of home purchase loan applicants with incomes less than 80 percent of the median family income for their metropolitan areas applied for government-backed loans; by contrast, 7 percent of applicants with incomes of at least 120 percent of the metropolitan area median applied for such loans (derived from Table 2, government-backed memo item). In addition, loan applicants seeking to buy a home in low- or moderate income neighborhoods were more likely to apply for government-backed loans than those seeking to buy homes in upper-income neighborhoods. In central cities and neighborhoods with greater proportions of minority residents, applications for government-backed homes accounted for a higher share of all home purchase loan applications.
The greater reliance of lower-income households on government-backed loans reflects several factors. The low downpayment requirements and the ability to finance closing costs make FHA and VA loans particularly attractive to lower-income households and first-time homebuyers, who are likely to have fewer financial resources than other homebuyers. Dollar limits on the amount of FHA loan insurance or VA loan guarantees make these government-backed loans unavailable or less attractive to households seeking to buy more expensive properties.
For conventional and government-backed home purchase lending, lending to Asians, Hispanics and Native Americans was up about 18 percent, 11 percent, and 23 percent respectively from 2001 to 2002; lending to whites and blacks rose 3 percent and 2 percent respectively from 2001 to 2002 (Table 7).
Home purchase lending increased modestly for all income categories from 2001 to 2002. Lower-income households experienced the greatest expansion, 5 percent; over the same period, home purchase lending increased by 4 percent for middle- and upper-income households, and by 3 percent for moderate-income households (Table 7).
The overall denial rate for conventional home purchase loans in 2002 was 14 percent, down from a rate of 21 percent in 2001. A large portion of this decline can be attributed to a significant drop in the number of applications for manufactured home loans, which have very high denial rates.2 (Data not shown in tables). In 2002, the roughly two-dozen reporters categorized by HUD as manufactured home loan specialists denied about 60 percent of all the applications they received for conventional home purchase loans. This proportion represents a marginal decline from earlier years, when these lenders denied about two-thirds of all their applicants. In 2002, there was a sharp contraction from 2001 in reported manufactured home loan activity.3 (Data not shown in tables.) The number of applications for conventional home purchase loans submitted to these lenders in 2002 dropped 65 percent from 2001, reflecting difficulties in the manufactured housing market. If the manufactured home purchase loan applications and denials reported by these lenders are excluded from both the 2001 and 2002 data, the denial rates for conventional home purchase loan applications would have been 13 percent in 2001 (instead of 21 percent) and 12 percent in 2002 (instead of 14 percent).
The HMDA data show that denial rates for home purchase loan applications vary with income. For example, in 2002 the denial rate for conventional home purchase loans for lower-income applicants was 20 percent as compared with 8 percent for higher-income applicants (derived from Table 3).
Denial rates for conventional home purchase loans continue to vary among applicants by race or ethnicity and by income; in 2002, however, denial rates were markedly lower than in 2001 for every race and income group. In 2002, 26 percent of black applicants, 23 percent of Native American applicants, 18 percent of Hispanic applicants, 12 percent of white applicants, and 10 percent of Asian applicants were denied conventional home purchase loans (Table 3). Denial rates for conventional home purchase loans in 2001 were 36 percent for blacks, 35 percent for Native Americans, 23 percent for Hispanics, 16 percent for whites, and 11 percent for Asians. The decline in denial rates from 2001 to 2002 follows the pattern of declining denial rates since 1998. This pattern is in contrast to the experience over the longer period from 1993 to 1998, when denial rates for all ethnic and racial groups increased substantially.
Differences in the income levels of the racial or ethnic groups account for some of the differences among them in denial rates for 2002. However, other factors are more important given that for all income groups, white and Asian applicants experienced lower rates of denial than Native American, black, or Hispanic applicants (Table 4). The extent to which racial discrimination may account for remaining differences in denial rates across racial and ethnic lines cannot be determined from the HMDA data.
Many lenders report reasons for denial of loan applications; in 2002, as in prior years, the reason most frequently cited01/15/2009 11:04 AM regardless of the applicant's race or ethnic status, was poor or no credit history (data not shown in tables). This factor was cited in 41 percent of the denials for Native Americans, 37 percent of the denials for blacks, 33 percent of the denials for whites, 31 percent of the denials for Hispanics, and in 23 percent of the denials for Asians.
Missing Information on Race and Ethnicity
Until recently, lenders were not required to collect information on an applicant's race or ethnicity and sex for applications taken entirely by telephone. However, as of January 1, 2003, lenders are required to ask applicants for race, ethnicity, and sex information in telephone applications. For applications taken in person or by mail or electronic means (such as by facsimile or the Internet), a lender must request the information. In all cases, an applicant has the option not to provide the information.
The incidence of applications and loans reported without data on race or ethnicity (based on whether information was missing for the first listed applicant) grew from 1993 to 2001, then fell slightly from 2001 to 2002. From 1993 to 2001, the proportion of home loan applications of all types with missing race or ethnicity data increased from about 8 percent to about 30 percent. However, this proportion fell to 28 percent in 2002. (Table 8). For home purchase loan applications, the proportion of applications missing race or ethnicity data is lower than the proportion for other application types, but follows the same general pattern. Applications for home purchase loans lacking the information grew from about 4 percent in 1993 to about 18 percent in 2001, involving roughly 1.4 million loan applications. In 2002, the percentage of such applications fell to 15 percent, but involved roughly 1.1 million applications. The same pattern is observed for home purchase loans originated. In 1993, 3 percent of such loans lacked information about race or ethnicity. By 2001, 13 percent lacked this information; in 2002, the proportion of home purchase loans missing the information fell to 12 percent.
The increase in home purchase applications missing data on race and ethnicity
is due in part to the increased proportion of all home purchase loan applications
reported by institutions specializing in manufactured home lending. (Data
not shown in tables). These institutions frequently use indirect methods
for soliciting applications, which are often submitted without the race
and ethnicity data. For example, preliminary estimates for 2002 suggest
that nearly 26 percent of the conventional home purchase loan applications
filed by lenders specializing in manufactured home lending did not include
race or ethnicity data.4 For all other conventional
home purchase loan applications in 2002, the incidence of missing race
and ethnicity data was 15 percent. Under revisions to HMDA effective January
1, 2004, loans for manufactured homes will be distinguished in the HMDA
data from loans for site-built homes.
1. The FFIEC has also compiled insurance data submitted by seven major private mortgage insurance (PMI) companies under the auspices of the Mortgage Insurance Companies of America. These data, which relate to application decisions made by the PMI companies during 2002, show about 2.6 million applications for PMI (about 1.5 million for home purchase loans, and 1.1 million for refinancings). These data are available from the individual companies, and-in the same formats as the HMDA data-at the central depositories and from the FFIEC.
2. These calculations are based on the list of lenders identified by HUD as manufactured home lending specialists in 2001, which was the most recent list available at the time of this publication.
3. A comparison of 2001 and 2002 loan application volumes reported by lenders identified by HUD as specializing in manufactured home lending reveals that most of the decline in reported application activity among these lenders is associated with four reporters. Together, these four lenders reported nearly 706,000 fewer applications in 2002 than in 2001. Other evidence of contraction in the manufactured home sector comes from industry statistics that indicate shipments of manufactured homes fell 12 percent from 2001 to 2002.
4. More precise estimates are not possible until HUD publishes a final list of lenders specializing in manufactured home lending for the year 2002. This information was not available at the time of this publication. Preliminary estimates for 2002 were based on the 2001 HUD list of manufactured home lenders.