The State of Fair Lending in the United States “A Review of HMDA Data 2004-2012�
Maurice Jourdain-Earl Managing Director ComplianceTech
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Today’s Agenda • • • • • • •
Background and Purpose Fair Lending and the Mortgage Lending Life Cycle Fair Lending Analysis Progression Origination, Denial and Fallout Rate Trends 2004-2012 Distribution of Loan Types by Race/Ethnicity 2004-2012 2012 Loan Product Distribution by Race Underwriting and Pricing Disparities by Race, Loan Product and Census Tract % Minority - 2012 • Market Penetration Disparities by Race 2012
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Background & Purpose The Home Mortgage Disclosure Act (HMDA) was enacted by Congress in 1975 and was implemented by the Federal Reserve Board's Regulation C. On July 21, 2011, the rule-writing authority of Regulation C was transferred to the Consumer Financial Protection Bureau (CFPB). This regulation provides the public loan data that can be used to assist: a. in determining whether financial institutions are serving the housing needs of their communities; b. public officials in distributing public-sector investments so as to attract private investment to areas where it is needed;
c. and in identifying possible discriminatory lending patterns.
This regulation applies to certain financial institutions, including banks, savings associations, credit unions, and other mortgage lending institutions. Confidential Do Not Publish without Prior Consent
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Fair Lending Analysis Progression
Descriptive statistics
Inferential Statistics Regression
Comparative File Analysis
HMDA Analysis
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Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 Total
$ Volume 2,569,439,170,000.00 2,887,912,041,000.00 2,615,776,234,000.00 2,074,074,736,000.00 1,415,069,222,000.00 1,822,262,565,000.00 1,642,727,371,000.00 1,490,056,094,000.00 2,135,312,839,000.00 $18,652,630,272,000.00
Units 15,028,550 15,621,943 13,970,183 10,441,545 7,177,262 8,950,936 7,863,337 7,095,262 9,783,966 95,932,984
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12.000.000
# Loans by Race 2004-2012
10.000.000 8.000.000 6.000.000 4.000.000 2.000.000 0
2004 2005 2006 2007 2008 2009 2010 2011 2012 White 9.840.978 9.964.367 8.683.671 6.905.991 5.098.364 6.677.192 5.832.691 5.212.731 7.187.150 Black 1.088.394 1.255.051 1.232.784 790.254 425.078 373.355 307.407 279.552 379.203 Hispanic 1.559.629 1.855.720 1.801.924 1.068.375 546.008 527.098 457.997 442.160 604.633 Asian 594.816 611.130 521.803 382.493 266.039 394.554 411.617 377.945 550.207 Confidential Do Not Republish without Prior Consent
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% Share of Loans by Race 2004-2012 90,00 80,00 70,00 60,00 50,00 40,00 30,00 20,00 10,00 0,00
2004 White Share 74,53 Black Share 8,24 Hispanic Share 11,81 Asian Share 4,50
2005 72,16 9,09 13,44 4,43
2006 70,33 9,98 14,59 4,23
2007 74,91 8,57 11,59 4,15
2008 79,94 6,66 8,56 4,17
2009 83,25 4,65 6,57 4,92
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2010 82,73 4,36 6,50 5,84
2011 82,09 4,40 6,96 5,95
2012 81,92 4,32 6,89 6,27 9
% Change in # Loans by Race 2004-2012 40,00% 20,00% 0,00% -20,00% -40,00% -60,00% -80,00%
-100,00% -120,00%
% Chg. 04-05 White 1,24% Black 13,28% Hispanic 15,96% Asian 2,67%
% Chg. 05-06 -14,75% -1,81% -2,99% -17,12%
% Chg. % Chg. % Chg. % Chg. % Chg. 06-07 07-08 08-09 09-10 10-11 -25,74% -35,46% 23,65% -14,48% -11,89% -56,00% -85,91% -13,85% -21,45% -9,96% -68,66% -95,67% -3,59% -15,09% -3,58% Confidential Not Republish 32,57% without Prior Consent -36,42%Do -43,77% 4,15% -8,91%
% Chg. 11-12 27,47% 26,28% 26,87% 10 31,31%
Total % Chg. in # Loans by Race 2004-2012 0,00% -20,00%
White
Black
Hispanic
Asian
-40,00% -60,00%
% Chg. 2004-2012
-80,00%
-100,00%
White
-36.92%
-120,00%
Black
-187.02%
-140,00%
Hispanic -157.95%
-160,00%
Asian
-180,00%
-8.11%
-200,00%
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# Loans by Census Tract % Minority 2004-2012 0-10%
10-20%
2004
4,877,235
3,142,481
2005
4,923,586
2006
20-30%
30-40%
40-50%
50-60%
60-70%
70-80%
80-90%
90-100%
1,926,853 1,207,756
848,198
623,345
548,409
473,222
470,266
744,451
3,276,401
2,041,140 1,275,386
905,220
672,284
582,124
504,804
498,346
808,185
4,421,429
2,912,903
1,799,045 1,122,556
802,976
600,643
514,548
454,900
459,995
748,335
2007
3,620,249
2,247,542
1,322,186
794,107
555,898
401,401
336,349
291,214
294,371
478,686
2008
2,763,824
1,576,117
876,577
515,206
349,028
240,235
194,391
158,922
152,097
246,445
2009
3,688,624
2,080,666
1,098,361
601,654
390,941
256,587
201,490
154,373
141,608
190,934
2010
3,243,716
1,840,652
983,960
537,759
349,799
230,516
181,701
139,621
127,212
159,229
2011
2,873,670
1,664,920
902,331
498,014
324,996
213,181
169,348
128,937
117,916
155,463
2012
2,495,674
2,388,287
679,577
473,242
353,113
293,251
244,689
258,623
1,501,294 1,038,536
32,908,007 21,129,969 12,451,747 7,590,974 5,206,633 3,711,434 3,081,473 2,599,244 2,506,500 3,790,351
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Total # Loans by Census Tract % Minority 2004-2012 35.000.000 30.000.000 25.000.000 20.000.000
15.000.000 10.000.000 5.000.000 0
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0-10%
32,908,007
10-20%
21,129,969
20-30%
12,451,747
30-40%
7,590,974
40-50%
5,206,633
50-60%
3,711,434
60-70% 70-80%
3,081,473 2,599,244
80-90%
2,506,500
90-100%
3,790,351
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% Chg. # Loans by Census Tract % Minority 2004-2012 0,00% -20,00% -40,00%
% Chg. 2004-2012
-60,00%
0-10%
-95.43%
-80,00%
10-20%
-31.58%
20-30%
-28.35%
30-40%
-16.29%
40-50%
-24.81%
50-60%
-31.72%
60-70%
-55.31%
-160,00%
70-80%
-61.37%
-180,00%
80-90%
-92.19%
90-100%
-187.85%
-100,00% -120,00% -140,00%
-200,00%
0-10%
10-20%
20-30%
30-40%
40-50%
50-60%
60-70%
70-80%
80-90%
90-100 %
% Chg. 2004-2012 -95,43% -31,58% -28,35% -16,29% -24,81% -31,72% -55,31% -61,37% -92,19% -187,85%
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# 1st Lien Subprime Rate Loans by Race 2.000.000 1.500.000
White Black
1.000.000
Hispanic
500.000
Asian
0
2004
2005
2006
2007
2008
2009
2010
2011
2012
% 1st Lien Subprime Rate Loans by Race 60,00 50,00 40,00 30,00 20,00 10,00 0,00 White Black Hispanic Asian
2004 11,38 30,03 17,10 5,72
2005 18,60 46,67 34,88 15,01
2006 21,57 49,09 38,81 17,88
2007 15,43 34,65 26,13 10,25
2008 11,26 21,67 16,79 4,72
2009 5,11 9,81 8,07 1,80
2010 2,92 6,25 5,20 0,73
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2011 3,43 7,17 6,26 1,01
2012 2,72 5,75 4,98 1,02 15
% Conventional Loans by Race
% FHA Loans by Race
120,00 100,00 80,00
60,00 40,00 20,00 0,00
2004 2005 2006 2007 2008 2009 2010 2011 2012
50,00 45,00 40,00 35,00 30,00 25,00 20,00 15,00 10,00 5,00 0,00
2004 2005 2006 2007 2008 2009 2010 2011 2012
White
94,54 95,92 95,74 93,98 80,23 76,00 78,36 79,58 80,80
White
3,78
2,85
3,05
4,47 16,36 19,01 16,74 13,61 12,11
Black
88,43 93,18 94,04 88,50 58,89 41,94 45,61 50,18 53,71
Black
8,21
4,95
4,30
8,83 34,42 44,98 40,68 32,64 28,73
Hispanic 92,50 96,18 96,81 93,90 69,49 52,52 54,74 58,67 62,72
Hispanic 6,40
3,15
2,55
4,92 26,99 40,63 38,28 32,72 28,67
Asian
Asian
0,79
0,76
1,10
98,47 98,98 98,98 98,57 91,78 87,99 89,19 90,16 91,21
1,22
% VA Loans by Race 18,00 16,00 14,00 12,00 10,00 8,00 6,00 4,00 2,00 0,00
8,34
7,11
% FSA/RH by Race 2,50 2,00 1,50 1,00 0,50
2004 2005 2006 2007 2008 2009 2010 2011 2012
White
1,49
1,05
1,02
1,22
2,48
Black
3,27
1,80
1,60
2,44
Hispanic 0,98
0,59
0,53
0,91
Asian
7,39 10,84 9,72
0,30
0,22
0,24
0,30
0,00
2004 2005 2006 2007 2008 2009 2010 2011 2012
White
0,18
0,18
0,19
0,34
0,92
1,49
1,23
1,81
1,53
5,91 11,40 12,01 15,31 15,82
Black
0,08
0,07
0,07
0,22
0,78
1,68
1,71
1,87
1,73
2,56
6,79
Hispanic 0,11
0,08
0,10
0,28
0,97
1,88
1,77
2,22
1,82
1,50
Asian
0,01
0,01
0,03
0,08
0,15
0,14
0,21
0,17
0,75
3,50 4,96 1,02
3,68 5,21 0,96
5,01 6,40 1,29
5,57
0,02
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Origination Rate Trend by Race 2004-2012 80,00
70,00 60,00 50,00
40,00 30,00
20,00 10,00
0,00
2004 White 60,29 Black 43,68 Hispanic 52,02 Asian 61,64
2005 58,28 42,77 50,35 57,57
2006 57,25 41,89 47,84 54,62
2007 54,70 36,04 40,02 50,69
2008 55,04 34,83 38,54 49,85
2009 63,30 43,51 47,98 58,96
2010 64,01 45,65 51,65 63,02
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2011 63,52 45,16 52,23 61,84
2012 66,90 49,02 55,74 65,78 17
Denial Rate Trend by Race 2004-2012 50,00 45,00 40,00 35,00 30,00 25,00 20,00 15,00 10,00 5,00 0,00
2004 White 18,66 Black 31,86 Hispanic 23,99 Asian 16,38
2005 19,36 31,45 24,67 18,38
2006 20,92 33,79 27,59 20,42
2007 24,14 40,82 35,34 24,12
2008 24,59 43,70 38,23 24,76
2009 18,09 34,06 29,49 19,06
2010 18,04 33,61 27,48 17,14
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2011 18,50 34,42 27,32 17,77
2012 16,47 31,66 25,03 16,17 18
Fallout Rate Trend 2004-2012 30,00 25,00 20,00 15,00 10,00 5,00
0,00
2004 White 21,05 Black 24,46 Hispanic 23,99 Asian 21,98
2005 22,36 25,78 24,99 24,05
2006 21,82 24,32 24,57 24,96
2007 21,16 23,14 24,65 25,19
2008 20,37 21,47 23,23 25,40
2009 18,61 22,44 22,52 21,98
2010 17,95 20,74 20,88 19,84
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2011 17,98 20,42 20,45 20,40
2012 16,63 19,32 19,23 18,04 19
2012 Overall Disparities by Race 2012 Overall Disparities by Race
2,50 2,00 1,50 1,00
0,50 0,00
ODI DDI FDI
White 1,00 1,00 1,00
Black 1,38 1,94 1,16
Hispanic 1,20 1,50 1,15
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Asian 1,02 0,98 1,08 20
2012 Loan Product Distribution Rank 1
2 3
4 5
Product
#
%
Conventional, 1st Lien, Refinance, Owner4,950,698 Occupied, 1-4 Family Conventional, 1st Lien, Purchase, Owner1,245,152 Occupied, 1-4 Family FHA, 1st Lien, Purchase, Owner-Occupied, 1-4 699,816 Family Conventional, 1st Lien, Refinance, Non Owner- 606,195 Occupied, 1-4 Family FHA, 1st Lien, Refinance, Owner-Occupied, 1-4 554,043 Family
50.86
Sub-Total
82.76
8,055,904
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12.79 7.19
6.23 5.69
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I 2012 Blacks and Hispanics had Different Loan Type Experiences
White #
%
Black #
Conventional 5,739,727 80.80% 200,494
Hispanic
%
#
%
53.71%
379,221
62.72%
28.73%
173,338 28.67%
FHA
859,966
12.11% 107,243
VA
395,560
5.57%
59,064
15.82%
41,056
FSA
108,338
1.53%
6,457
1.73%
11,018
100.00%
604,633
7,103,591 100.00% 373,258
Asian #
%
493,372 91.21% 38,453
7.11%
6.79%
8,135
1.50%
1.82%
941
0.17%
100.00% 540,901 100.00%
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2012 Underwriting Disparities by Race and Loan Product Conventional, 1st Lien, Refinance, Owner-Occupied, 1-4 Family
Conventional, 1st Lien, Purchase, Owner-Occupied, 1-4 Family
Race
ODI
DDI
FDI
Race
ODI
DDI
FDI
White Black Hispanic Asian
1.00 1.34 1.20 1.00
1.00 1.88 1.56 0.96
1.00 1.23 1.19 1.04
White
1.00
1.00
1.00
Black
1.55
2.79
1.13
Hispanic
1.25
1.87
1.18
Asian
1.08
1.10
1.24
FHA, 1st Lien, Purchase, Owner-Occupied, 1-4 Family
Race White Black Hispanic
ODI 1.00 1.24 1.13
DDI 1.00 1.66 1.34
FDI 1.00 1.26 1.20
Asian
1.13
1.36
1.20
FHA, 1st Lien, Refinance, Owner-Occupied, 1-4 Family Race White Black
ODI 1.00 1.26
DDI 1.00 1.45
FDI 1.00 1.17
TDI 3.00 3.88
Hispanic 1.07
1.17
1.04
3.29
1.05
1.05
3.15
Asian
1.04
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2012 Pricing Disparities by Race and Loan Product Conventional, 1st Lien, Refinance, Owner-Occupied, 1-4 Family Race
Loans
White 3,771,956 Black 123,712 Hispanic 227,108 Asian Total
Race
Loans w/Spread
%
Avg. Spread
45,268 3,467 4,436
1.20 2.80 1.95
2.42 2.61 2.54
315,330 883 0.28 2.00 4,950,698 58,075 1.17 2.41 FHA, 1st Lien, Purchase, Owner-Occupied, 1-4 Family Loans
Loans w/Spread
White 444,968 16,634 Black 64,128 4,248 Hispanic 115,092 6,392 Asian 22,777 475 Total 699,816 29,648
%
Avg. Spread
3.74 6.62 5.55 2.09 4.24
1.90 1.85 1.85 1.87 1.88
Conventional, 1st Lien, Purchase, OwnerOccupied, 1-4 Family Loans Avg. Race Loans % w/Spread Spread White 946,832 29,904 3.16 2.53 Black 26,956 1,757 6.52 2.71 Hispanic
63,470
4,966
7.82
2.74
Asian
96,592
1,218
1.26
2.37
Total
1,245,152
39,468
3.17
2.55
FHA, 1st Lien, Refinance, OwnerOccupied, 1-4 Family Race
Loans
White 385,160 Black 39,929 Hispanic 53,849 Asian 15,447 Total 554,043
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Loans w/Spread
%
Avg. Spread
16,636 3,854 2,317 318 24,077
4.32 9.65 4.30 2.06 4.35
3.07 3.27 2.65 2.96 3.04 24
2012 Pricing Disparities by Loan Product and Census Tract % Minority Conventional 1st Lien Refi 1-4 Family Tract % Minority
Loans
Loans w/Spread
%
Avg. Spread
<10%
1,341,707
20,467
1.53
2.45
10-20%
1,279,510
11,489
0.90
2.37
20-30% 30-40% 40-50% 50-60% 60-70% 70-80% 80-90% 90-100% Unk/NA Total
773,108 512,296 319,571 216,378 157,032 130,285 106,803 92,858 21,150
7,418 5,183 3,425 2,363 1,938 1,419 1,282 2,434 657
0.96 1.01 1.07 1.09 1.23 1.09 1.20 2.62 3.11
2.39 2.40 2.34 2.30 2.46 2.31 2.33 2.62 2.75
4,950,698
58,075
1.17
2.41
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2012 Pricing Disparities by Loan Product and Census Tract % Minority Conventional 1st Lien Purchase 1-4 Family Tract % Minority
<10% 10-20% 20-30% 30-40% 40-50% 50-60% 60-70% 70-80% 80-90% 90-100% Unk/NA Total
Loans
Loans w/Spread
%
Avg. Spread
318,285 337,132 202,475 132,448 83,784 53,210 38,020 29,339 22,198 21,185 7,076
13,480 7,843 5,047 3,435 2,156 1,535 1,308 922 864 2,164 714
4.24 2.33 2.49 2.59 2.57 2.88 3.44 3.14 3.89 10.21 10.09
2.51 2.53 2.59 2.59 2.61 2.56 2.57 2.67 2.68 2.54 2.58
1,245,152
39,468
3.17
2.55
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2012 Pricing Disparities by Loan Product and Census Tract % Minority FHA 1st Lien Home Purchase 1-4 Family Tract % Minority
<10% 10-20% 20-30% 30-40% 40-50% 50-60% 60-70% 70-80% 80-90% 90-100% Unk/NA Total
Loans
Loans w/Spread
%
Avg. Spread
118,355 142,058 103,776 81,471 60,240 46,720 37,550 34,843 30,604 41,579 2,620 699,816
4,912 5,051 3,601 2,950 2,344 2,175 1,944 1,941 1,941 2,690 99 29,648
4.15 3.56 3.47 3.62 3.89 4.66 5.18 5.57 6.34 6.47 3.78 4.24
1.93 1.90 1.92 1.87 1.88 1.84 1.86 1.84 1.83 1.85 1.84 1.88
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2012 Pricing Disparities by Loan Product and Census Tract % Minority FHA 1st Lien Refi 1-4 Family Tract % Minority <10% 10-20% 20-30% 30-40% 40-50% 50-60% 60-70% 70-80% 80-90% 90-100% Unk/NA Total
Loans
Loans w/Spread
%
113,819 123,702 82,435 61,039 42,921 32,527 25,045 22,344 19,097 26,939 4,175 554,043
5,082 4,761 3,213 2,321 1,659 1,213 1,069 935 1,058 2,745 21 24,077
4.46 3.85 3.90 3.80 3.87 3.73 4.27 4.18 5.54 10.19 0.50 4.35
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Avg. Spread 3.04 3.05 3.11 3.04 3.02 3.14 3.03 3.04 3.05 2.95 2.05 3.04 28
2012 Market Penetration Disparities by Race Race
Loans
Population
Ratio
196,844,498 63.12%
1.29
White
7,187,150
81.64%
Black
379,203
4.31%
37,690,511
12.09%
0.36
Hispanic
604,633
6.87%
54,166,049 17.37%
0.40
Asian
550,207
6.25%
14,468,054
4.64%
1.35
Native American
26,292
0.30%
2,247,427
0.72%
0.41
Hawaiian
25,610
0.29%
481,653
0.15%
1.88
MultiRace
30,574
0.35%
5,967,844
1.91%
0.18
Totals
8,803,669 100.00% 311,866,036 100.00% Confidential Do Not Republish without Prior Consent
1.00
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Maurice Jourdain-Earl Managing Director
jourdainearl@compliancetech.com 202-842-3800 www.compliancetech.com
Published on Nov 25, 2013
