The Effects of the Suspended FHA Premium Cut on Long Island, New York, Working Paper 2017-01

The Effects of the Suspended FHA Premium Cut on Long Island, New York Working Paper 2017-01

Christopher Niedt, Ph.D.

Hempstead, New York Lawrence Levy, Executive Dean

Executive Summary In the immediate aftermath of the housing crisis, homeowners increasingly relied on loans insured by the Federal Housing Administration. FHA loans accounted for fewer than 4% of all home purchase loans in 2007, but the figure rose to 20% in 2008, and to 28% in 2009. 1 This dramatic increase, coupled with the lingering recession, placed extraordinary pressure on FHA Mutual Mortgage Insurance Fund (MMIF). In 2010, the Federal Housing Administration made the first of several increases to FHA loan premiums to shore up the program’s reserves. Although these measures did not avert a transfer from the Treasury in 2013, an improving economy and declining foreclosures allowed the FHA to reduce these in 2015. A final cut was scheduled for January 27th. On its first day in office, the new administration suspended this reduction, citing the need to “study” the issue.

Since FHA lending in the New York metropolitan area is primarily suburban lending, the decision to suspend the cut will cost Long Island’s homeowners and the regional economy millions of dollars in savings over the life of these loans. Many families of modest means and first time home buyers, and most Black and Latino/a borrowers count on FHA to propel them into homeownership. FHA-insured lending has helped rebuild housing wealth in foreclosure-burdened, majority-minority communities, albeit at a high cost to individual homeowners. The FHA rate cut would have provided some relief to these homeowners. Now, with the suspension of the cut, these households will continue to pay more and work harder to save for the American Dream of homeownership. Local communities will continue to lose capital as it is siphoned away from local economies to the Federal government.

In this paper, we analyze Home Mortgage Disclosure Act (HMDA) data for 2015 to identify who is taking out FHA loans, where they live, and how much a 0.25% FHA premium reduction would have saved them. Since FHA lending trended higher in 2015 and 2016, this calculation serves as a conservative estimate of how much borrowers who buy homes in the year following January 27th would have saved annually.

Our key findings: 





In the New York area, FHA lending in 2015 was primarily suburban lending. In 2015, 4,789 FHA mortgages were originated on Long Island, 33% more than the 3,614 FHA mortgages originated in the whole of New York City. FHA loans accounted for 24% of all originations and $1.5 billion total lending on Long Island in 2015.

The 0.25% premium cut would have translated into savings of about $3.8 million annually on Long Island or $797 per FHA borrower. Though only 14% of New York State’s population lives on Long Island, the region accounts for 28% of the state’s lost savings. New York City borrowers could lose $4.1 million annually.

White FHA borrowers $0 $500,000 $1,000,000 $1,500,000 $2,000,000 will lose the bulk of the savings, due to the large White $1,808,528 number of loans Latino/a $810,643 originated to this group.

Asian-Am. $175,318 White borrowers stand to Black / Af-Am. $555,405 lose $1.8 million annually from the suspended cut.

Multi-racial $207,615 Other cats

$12,595

No info

$247,183

2



But Black/African American and Latino/a homebuyers will be affected di Over 58% of Long Island’s Black/African American and Latino/a borrowers rely on FHA loans, by far the highest rates of any group.

0% White

10%

20%

30%

Average



 

70%

11.19% 58.83%

Multi-racial No info

60%

58.18%

Black / Af-Am. Other cats

50%

17.37%

Latino/a Asian-Am.

40%

25.94% 23.08% 17.89% 23.70%

The premium cut would have saved Latino/a FHA homebuyers $811,000 annually (or $717 annually per FHA borrower), and saved Black/African American homebuyers $555,000 (or $790 per FHA borrower).

In 23 of Long Island’s 292 communities, FHA-insured loans accounted for more than half of all originations. Most of these were the same places that were hard-hit by the foreclosure crisis.

Four of Long Island’s congressional districts (the 1st, 2nd, 4th, and 5th) led the state in total FHA lending. Lost savings total more than $1 million annually in three of these districts (1st, 2nd, and 5th).

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Effects of Cancelling the FHA Premium Cut on Long Island FHA insurance has long played a key role in helping families achieve homeownership. By guaranteeing government loans, the FHA encourages lenders to extend credit to buyers whose down payments or credit scores fall short of standards for conventional lending. The FHA charges premiums to capitalize the Mutual Mortgage Insurance Fund (MMIF) and offset the risks inherent in mortgage insurance. Pushed to the sidelines during the subprime boom, FHA purchase originations skyrocketed from 2007-2009, as tight underwriting standards for down payments and creditworthiness placed conventional home purchase loans out of reach for many.2 Buyers pay two premiums for FHA loans: an Up-Front Mortgage Insurance Premium (UFMIP, currently 1.75%) paid immediately after closing and an ongoing Mortgage Insurance Premium paid monthly or yearly. Prior to the foreclosure crisis, the MIP for a 30-year conforming loan was generally set at 0.50%, and the MIP could be removed when loans were paid down to 78% loan-to-value (LTV). When the crisis hit, FHA reserves were drained, and lawmakers responded by increasing the statutory cap for FHA premiums to support the Mutual Mortgage Insurance fund. Annual MIPs rose as high as 1.30-1.35% on 30-year conforming loans. The fund nevertheless required an infusion of $1.7 billion from the Treasury in 2013. In 2013, FHA also extended the period of time during which borrowers had to pay the MIP; borrowers now pay the premium for 11 years for loans below or equal to 90% LTV at origination, and for the full term of the loan, if the LTV is over 90%.

While these measures successfully replenished FHA’s reserves, they placed an increased cost burden on homeowners. Yet, some homebuyers were affected more than others. In December 2014, the National Center for Suburban Studies at Hofstra (NCSS) released a report documenting Latino/a and Black/African American borrowers’ heavy reliance on FHA lending. FHA lending was also geographically clustered in majority-minority communities – primarily in southern/western Nassau County and western Suffolk – that had experienced high rates of foreclosure, and which were struggling to rebuild community wealth.3 In the final years of the Obama Administration’s second term, the premiums were reduced, falling to 0.80-0.85% for a 30-year mortgage for a base loan of $625,000 or less in January 2015.4 A final cut of 0.25% was planned for January 27th, which would have brought FHA rates close to their pre-crisis levels.

On its first day, the incoming Trump Administration indefinitely suspended the cut. Moreover, it announced that the agency would review both FHA premiums and the role of the FHA in housing finance more broadly.

This policy report uses publicly-available Home Mortgage Disclosure Act (HMDA) to measure the prevalence and geographic distribution of FHA-insured loans on Long Island (see Appendix A for a detailed discussion of methods). We calculate the how much the suspended cut would have saved homeowners, and we examine which groups of homeowners will be most affected by the decision to maintain premiums at their current level.

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Results Loan Volume by County Table 1a shows the total number of conventional, FHA, VA, and other government-backed loans by county, and Table 1b shows total mortgage lending in those jurisdictions and the yearly cost of the foregone premium cut.

In the New York area, FHA lending is primarily suburban lending:     

In 2015, 4,789 FHA mortgages were originated on Long Island,32.5% higher than the 3,614 FHA mortgages issued in the whole of New York City.

Suffolk County alone accounted for over 3,000 FHA mortgages, while Manhattan accounted for only 2.

Total FHA mortgage lending was slightly higher in New York City ($1.6 billion) than on Long Island ($1.5 billion), due to the city’s larger average loan size.

FHA lending totaled $625 million in Nassau County and $902 million in Suffolk in 2015.

If the changes in the premium are reversed Long Island borrowers will save $3.8 million annually for as long as they pay the premium.5

FHA loan usage as a percentage of all originations is also generally higher on Long Island than in the city: 





FHA accounted for 24% of all mortgage loans on Long Island. FHA accounted for 30% of all mortgage loans in Suffolk and 17% in Nassau. Both of these figures are higher than the corresponding figure for New York City (13%).

In Queens, FHA loans were 18% of all originations and total volume approached that of Nassau County, but FHA lending was highly concentrated in neighborhoods in southeastern Queens near the Nassau border.

Bronx homebuyers used FHA at a higher rate than Long Island (35%), but loan volume was low.

There are many explanations for the difference between Long Island and New York City. High home prices in New York City – especially Manhattan and the more expensive sections of western Brooklyn and Queens – commonly exceed FHA loan limits. The same areas have lower homeownership levels overall. Moreover, many co-ops and condos require high minimum down payments, forbid FHA financing, or both.

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Table 1a. Loan Originations by County, 2015 Loan Type

Long Island Nassau Suffolk New York City Bronx Brooklyn Manhattan Queens Staten Island

Conventional 14,781 7,980 6,801 23,497 1,333 5,905 6,791 6,943 2,525

FHA 4,789 1,737 3,052 3,614 732 834 2 1,552 494

VA/ Other Total Govt Backed originations 633 20,203 234 9,951 399 10,252 215 27,326 38 2,103 40 6,779 0 6,793 70 8,565 67 3,086

FHA as % of total 23.7% 17.5% 29.8% 13.2% 34.8% 12.3% 0.0% 18.1% 16.0%

Table 1b. Total Mortgage Lending by County

Long Island Nassau Suffolk New York City Bronx Brooklyn Manhattan Queens Staten Island

Annual lost savings due to suspended cut $3,817,248 $1,563,090 $2,254,158 $4,084,518 $802,900 $1,062,188 $3,858 $1,734,278 $481,295

FHA lending, in millions 1,527 625 902 1,634 321 425 2 694 193

Lost savings over 11 years $41,989,723 $17,193,990 $24,795,733 $44,929,693 $8,831,900 $11,684,063 $42,433 $19,077,053 $5,294,245

FHA Loan Volume and the Cost of the Suspended Cut by Race, Ethnicity, and Income African American and Latino/a borrowers depend disproportionately on FHA-insurance mortgages for financing, and are disproportionately impacted by the suspended cut, but white borrowers lose more total savings (Tables 2a and 2b): 



On Long Island, FHA loans accounted for 58.2% and 58.8% of originations to Latino/a and African American buyers, respectively. This is more than triple the proportion of non-Hispanic white borrowers who used FHA-insured loans (17.4%).

White borrowers nevertheless account for the plurality of FHA loans in the region -- 2,189 loans, or 45.3% of all FHA loans. These loans provide $723 million in financing to white borrowers (compared to $222 million for Black/African Americans and $324 million for Latino/as).

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

The suspended premium cut would have saved white homebuyers on Long Island $1.8 million annually, while Latino/as would have saved $811,000 and Black/African Americans $555,000.

This would have amounted to savings of $826, $717, and $790 per FHA borrower per year.

Table 2a. FHA receipt by race/ethnicity on Long Island Loan Type

White Latino/a Asian American Black or African American

Conv 10,056 744 1,502 438

FHA 2,189 1,131 192 703

VA/ Other Govt Backed 357 69 22 54

Multi-racial applicant or co-applicant of a different race/ethnicity Other categories (AIAN, NH, OPI) No info Total

677 49 1,315 14,781

256 15 303 4,789

54 1 76 629

Total 12,602 1,944 1,716 1,195

FHA as % of total 17.4% 58.2% 11.2% 58.8%

987 65 1,694 20,203

25.9% 23.1% 17.9% 23.7%

Table 2b. Cost of suspended premium by race/ethnicity on Long Island

White Latino/a Asian American Black or African American

Annual lost savings due to suspended cut $1,808,508 $810,638 $175,313 $555,400

Lost savings over 11 years $19,893,583 $8,917,013 $1,928,438 $6,109,400

$207,615 $12,595 $247,180 $3,817,248

$2,283,765 $138,545 $2,718,980 $41,989,723

Multi-racial applicant or co-applicant of a different race/ethnicity Other categories (AIAN, NH, OPI) No info Total

We also examined FHA use by income. The median income for a borrower in the 2015 dataset was $118,000, and we sorted each mortgage according to whether the applicant fell above or at/below this threshold. Overall, households at or below the median borrower income make greater use of FHA loans (32.9% of originations) than those above the median (13.5%), which is not surprising, given FHA’s mission to serve underserved and low-/middle-income borrowers.

But on Long Island these patterns vary considerably between racial and ethnic groups:

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







A majority of both lower- and higher- income Black/African Americans utilized FHA: 62% of all loans were FHA-insured for low-moderate income Blacks and 50% for higher-income Black buyers.

Both the higher and lower income Black and Latino/a groups greatly exceeded the figures for higher- and lower-income white and Asian American applicants. For low/moderate-income Latino/a homeowners, FHA loans were 64% of total originations, while 34% of loans to higherincome Latino/as were FHA. Twenty-three percent of white borrowers at or below the median borrower income used FHA. This was about as often as Long Island as a whole. In contrast, only 12% of loans to whites above the median were FHA-insured. White borrowers below the median lost over $1 million in annual savings when the cut was suspended.

High- and low-to-moderate-income Asian American borrowers used FHA loans at rates far below the regional average.

Table 3. FHA Cost of suspended premium by race/ethnicity on Long Island

Racial/ethnic group White

Income vs. app median of $118k Low-income

Latino/a

High-income Low-income

737 1006

6311 1571

11.7% 64.0%

$756,935 $691,945

Asian American

High-income Low-income

123 133

365 824

33.7% 16.1%

$117,208 $109,805

High-income Low-income High-income Low-income

59 568 135 14

857 922 268 43

6.9% 61.6% 50.4% 32.6%

$65,508 $420,750 $134,650 $11,535

High-income Low-income High-income

1 202 101

20 799 859

5.0% 25.3% 11.8%

$1,060 $145,678 $101,503

Low-income

157

378

41.5%

$111,628

High-income Low-income

99 3526

596 10710

16.6% $95,988 32.9% $2,537,330

High-income

1255

9276

13.5% $1,272,850

Black or African American Other categories (AIAN, NH, OPI) No info

Multi-racial applicant or coapplicant of a different race/ethnicity Total

Loan type FHA Total 1446 6173

FHA as Lost % of annual total savings ($) 23.4% $1,045,993

On the one hand, the much higher rates for Black and Latino/a buyers indicate that FHA insurance is fulfilling its mission of providing affordable mortgage financing for the underserved, a notable accomplishment for an agency which famously encouraged redlining well into the 1960s. But the fact that

8

FHA usage rates for higher-income Black/African American (50%) and Latino/a borrowers (34%) are substantially higher than rates for lower-income white buyers (23%) is cause for concern. It is possible that factors such as lower credit ratings or intergenerational wealth transfer (neither of which can be ascertained from HMDA) explain part of this difference. But our past research suggests that these disparities may also reflect the perpetuation of a dual credit market in the aftermath of the subprime crisis: mortgage lenders specializing in conventional loans lend primarily to White and/or Asian American buyers or buyers living in primarily White/Asian American communities; while another group of lenders that specialize in FHA products work primarily (but not exclusively) in majority-Black and Latino/a communities and with Black/Latino buyers.6 It is possible that more affluent Black borrowers may be taking out FHA mortgages when they would be better served by conventional financing. This is a concerning pattern that call for investigation by state and federal regulators.

Although the appearance of a dual credit market is troubling, FHA lending lacks many of the most damaging predatory and unsustainable characteristics of subprime lending, and the elevated rates of FHA foreclosures observed during 2008-2009 have subsided. Yet, historically high FHA premiums during 2010-2015 disproportionately affected Black and Latino/a buyers and undermined their ability to build wealth. Changes in the FHA premiums similarly have a disproportionate effect on Black and Latino/a borrowers, even if the effects remains greatest – in absolute terms – on white borrowers.

FHA Loan Volume and the Cost of the Suspended Cut by Place These findings for groups of homeowners are reflected in the geography of FHA lending. Table 4 and Appendix Table B-1 show FHA use by congressional district and by place – including both incorporated municipalities and census-designated places (CDPs) in Nassau and Suffolk counties: 





In 23 of the 292 places in the region, FHA-insured loans accounted for more than half of all originations locally. Together, loans from these 23 neighborhoods account for 27% of all FHA loans made on Long Island in 2015.

More than two-thirds of Queens’ FHA loans were made in neighborhoods south of the Grand Central and east of the Van Wyck Expressway (such as Jamaica, Hollis, and the Rockaways) and more than half of those neighborhoods’ loans were FHA insured (50%). In the remainder of Queens, only 8% of all loans were FHA insured. A dense area of FHA lending stretches across the county line between southeastern Queens and southern and western Nassau County.

The worst affected congressional districts in New York State were NY-1, NY-2, and NY-5 – all located wholly or partly on Long Island – where the suspended cut cost homeowners in each district more than $1 million annually.

Most of the places with the highest levels of FHA use were the same areas hard-hit by the foreclosure crisis. Figure 1 shows the relationship between FHA loans as a percentage of total originations in 2015 and the high-cost loans (as flagged by HMDA’s rate spread field) as a percentage of total originations in 2005-2006. The correspondence is striking, and indicates that FHA lending has filled the gap (or perhaps, recaptured the market) occupied for a time by subprime lenders in the late 1990s and early 2000s – meeting the needs of low-income borrowers and borrowers of color.

This underscores the importance of affordable FHA lending: FHA insurance has been a valuable tool as homebuyers in these areas have attempted to rebuild housing wealth in communities that are still among the most foreclosure- and “zombie home”-burdened in New York State and in the country. Higher FHA

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premiums and suspended rate cuts place pressure on households’ budgets, undermining rather than facilitating the development of community wealth.

Figure 1. FHA originations, 2015 vs. High-cost originations by place on Long Island (bubbles scaled to total originations in each census place, 2015).

100.00%

High-rate origination as % of total, 2005-2006

80.00% Village of Central Islip Hempstead

Roosevelt Uniondale Brentwood

60.00% North Bay Shore North Amityville New Cassel Baywood Mastic Beach

40.00%

20.00%

-20.00%

0.00% 0.00%

20.00%

40.00%

60.00%

FHA as a % of originations, 2015

10

80.00%

100.00%

Table 4. FHA Lending by congressional district, New York State, 2015

CD NY-1 NY-2 NY-3 NY-4 NY-5 NY-6 NY-7 NY-8 NY-9 NY-10 NY-11 NY-12 NY-13 NY-14 NY-15 NY-16

Area

Represent.

Long Island

Zeldin

Long Island

King

Long Island

Suozzi

Long Island

Rice

NYC/LI

Meeks

NYC

Meng

NYC

Velazquez

NYC

Jeffries

NYC

Clarke

NYC

Nadler

NYC

Donovan

NYC

Maloney

NYC

Espalliat

NYC

Crowley

Total FHA loans originations 1442 5106 1637 4809 450 5505 1085 5227 1446 2930 63 3095 175 1553 588 2374 201 1954 7 2978 502 3898 4 3880 23 1036 295 1889 225 456 601 4235

FHA loans as % of total 28.24% 34.04% 8.17% 20.76% 49.35% 2.04% 11.27% 24.77% 10.29% 0.24% 12.88% 0.10% 2.22% 15.62% 49.34% 14.19%

Lost annual savings $1,034,065 $1,231,278 $449,820 $955,203 $1,515,873 $87,958 $229,980 $727,400 $252,333 $13,555 $494,483 $6,825 $26,913 $347,793 $244,108 $619,335

NYC

Serrano

NYC/HV

Engel

NY-17

Hud. Valley

Lowey

632

5487

11.52%

$569,143

NY-18

Hud. Valley

Maloney

1174

5137

22.85%

$712,103

NY-19

Hud. Valley

Gibson

860

3796

22.66%

$362,580

NY-20

Tonko

1702

6580

25.87%

$696,123

Stefanik

1066

4367

24.41%

$378,263

NY-22

Capital District North Country Central NY

Tenney

1445

4283

33.74%

$397,765

NY-23

Central NY

Reed

779

3963

19.66%

$206,118

NY-24

Central NY

Katko

1872

5973

31.34%

$556,665

NY-25

Western NY

Slaughter

2005

6914

29.00%

$608,230

NY-26

Western NY

Higgins

1753

5632

31.13%

$496,128

NY-27

Western NY

Collins

1444

6365

22.69%

$486,230

23476

109422

21.45%

$13,706,263

NY-21

Total

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APPENDIX A. DATA AND METHODS In this report, we analyze Home Mortgage Disclosure Act (HMDA) datasets, which are publicly available from the Federal Financial Institutions Examination Council website (ffiec.gov). We use lenders’7 HMDA Loan Application Register (LAR) documentation of mortgage originations by census tract during the year 2015.8 We analyze HMDA datasets for Nassau County-Suffolk County and New York-Jersey City-White Plains metropolitan divisions, selecting originated first mortgages for the purchase of owner-occupied, 1-to-4 family units (including condominium and co-operative units). We calculate the use of FHA mortgages at the regional and county level. We present cross tabulations for race and ethnicity and loan type).9 We then divide these groups into two simple income categories – based upon whether the applicant’s income was more than $118,000 (the median applicant income for all racial categories in Long Island) or equal to or less than $118,000 – and measure FHA loan originations for each race/ethnicity-income combination.

We also use the Missouri Center Data Center’s MABEL/GeoCorr system to convert HMDA data by census tract into loan counts by place and congressional district. We used Mabel/GeoCorr to identify census tracts that are divided between multiple geographies. We created additional copies of mortgage records, and then weighted each according to the geography-specific allocation factor in the MABEL/GeoCorr v. 1.2 system.

We estimate the minimum cost of the suspended premium reduction to homebuyers by calculating how much homebuyers in 2015 would have benefitted annually if they had received a 0.25% premium cut, i.e., how much these buyers would have benefitted if the cut approved by President Obama last month, and suspended by President Trump on his first day in office, had instead taken place in 2015. This calculation relies on the assumption that the demand for FHA-insured mortgages will meet or exceed 2015 volume and that in an environment of rising prices, loan size will stay stable or rise.10 We multiply the total 2015 base loan amount by 0.25% to obtain a reasonable minimum estimate of the annual cost of suspending the cut to borrowers today. The reader should keep in mind that the resulting figures refer to the cost that buyers in the first year of their loan. In fact, since FHA borrowers are now obligated to pay this premium for either 11 years of the loan term, or until they sell or refinance their home, the actual cost to buyers will be many times higher than what is reported here. Additionally, since the figures reported here only refer to homebuyers who receive mortgage over a one-year period, the total cost to buyers will increase for every year that the MIP remains elevated.

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APPENDIX B. LENDING BY PLACE Table B-1. FHA Lending by place, 2015

Note: mortgages recorded for census tracts split between places were apportioned to places based upon population of the tract located in each places. Resulting mortgage totals were rounded to the nearest whole number. As a result, some places have zero FHA mortgages but non-zero values for FHA as a percentage of all mortgages and lost annual savings.

LoanType

Conv.

Albertson CDP Amagansett CDP Amityville village Aquebogue CDP Asharoken village Atlantic Beach village Babylon village Baiting Hollow CDP Baldwin CDP Baldwin Harbor CDP Barnum Island CDP Baxter Estates village Bay Park CDP Bay Shore CDP Bayport CDP Bayville village Baywood CDP Belle Terre village Bellerose Terrace CDP Bellerose village Bellmore CDP Bellport village Bethpage CDP Blue Point CDP Bohemia CDP Brentwood CDP Bridgehampton CDP Brightwaters village Brookhaven CDP

46 5 58 14 4 10 86 10 97 30 14 11 10 59 53 34 13 7 11 6 122 13 98 31 40 43 12 44 15

FHA 0 1 16 2 0 1 16 0 88 42 7 0 8 76 7 7 36 1 1 0 21 1 21 11 14 190 1 6 7

Other govt backed Total 0 46 0 6 1 75 3 19 0 4 0 11 2 104 0 10 14 199 2 74 1 22 0 11 2 19 7 142 2 62 1 42 3 52 0 8 0 12 0 6 2 145 1 15 9 128 4 46 2 56 4 237 0 13 1 51 2 25

13

FHA as % of total 0.00% 18.18% 21.09% 9.52% 7.14% 13.04% 15.38% 0.00% 44.22% 56.76% 32.35% 2.99% 40.43% 53.52% 11.29% 16.87% 69.23% 8.51% 5.56% 5.56% 14.48% 6.67% 16.41% 23.91% 25.00% 80.16% 8.68% 11.76% 29.10%

Subprime as % of total, 2005-6 20.33% 31.56% 37.88% 31.28% 9.79% 14.63% 24.47% 33.33% 48.95% 48.51% 35.03% 16.57% 28.21% 52.22% 22.97% 17.52% 56.41% 15.36% 35.71% 35.71% 26.05% 23.67% 23.07% 26.42% 28.09% 62.94% 13.40% 21.71% 45.98%

Lost annual savings $0 $1,125 $12,723 $1,628 $433 $1,800 $13,640 $0 $77,723 $36,065 $6,058 $478 $6,400 $50,325 $5,830 $6,913 $22,205 $683 $565 $308 $20,308 $675 $20,253 $10,798 $10,805 $122,538 $1,633 $6,650 $4,968

LoanType

Conv.

Brookville village Calverton CDP Carle Place CDP Cedarhurst village Center Moriches CDP Centereach CDP Centerport CDP Central Islip CDP Centre Island village Cold Spring Harbor CDP Commack CDP Copiague CDP Coram CDP Cove Neck village Cutchogue CDP Deer Park CDP Dering Harbor village Dix Hills CDP East Atlantic Beach CDP East Farmingdale CDP East Garden City CDP East Hampton North CDP East Hampton village East Hills village East Islip CDP East Marion CDP East Massapequa CDP East Meadow CDP East Moriches CDP East Northport CDP East Norwich CDP East Patchogue CDP East Quogue CDP East Rockaway village East Shoreham CDP East Williston village Eastport CDP

14 19 27 35 48 105 44 64 2 44 236 73 178 3 12 136 0 180 10 20 22 26 6 66 83 4 126 209 28 114 17 91 33 62 35 20 9

FHA 0 6 7 0 19 85 2 97 1 6 28 84 103 0 3 77 0 25 2 8 1 3 0 1 22 1 35 41 14 20 3 62 5 16 19 0 3

Other govt backed Total 0 14 4 29 1 35 0 35 5 72 11 202 0 46 5 166 0 2 1 51 8 272 7 164 12 293 0 3 1 16 5 217 0 0 4 209 0 12 0 28 0 23 0 29 0 6 1 68 4 109 0 5 5 166 6 256 3 45 4 138 0 20 11 164 1 38 3 82 2 55 1 21 2 14

14

FHA as % of total 0.00% 20.92% 20.00% 0.00% 25.91% 42.26% 3.80% 58.43% 23.53% 11.76% 10.29% 51.22% 35.15% 0.00% 19.05% 35.29% 9.52% 11.96% 13.04% 28.57% 4.35% 9.87% 0.00% 1.47% 20.18% 13.64% 21.08% 16.13% 31.30% 14.66% 15.00% 37.80% 11.91% 19.97% 33.66% 0.00% 22.51%

Subprime as % of total, 2005-6 8.40% 33.79% 25.62% 30.09% 33.86% 38.18% 14.53% 61.74% 24.42% 14.46% 22.93% 45.92% 37.36% 9.52% 13.95% 41.81% 15.05% 24.60% 14.63% 39.94% 62.24% 25.25% 18.68% 13.73% 26.84% 22.26% 35.37% 32.09% 29.41% 21.93% 18.95% 39.15% 25.36% 24.89% 22.92% 13.68% 26.95%

Lost annual savings $0 $4,485 $7,480 $0 $14,070 $62,298 $2,118 $56,388 $518 $7,043 $27,363 $56,993 $71,130 $0 $2,948 $60,955 $13 $29,760 $1,948 $6,368 $898 $2,913 $0 $1,590 $19,330 $675 $29,508 $39,250 $11,265 $19,355 $3,755 $42,250 $3,825 $14,025 $15,845 $0 $2,910

LoanType

Conv.

Eatons Neck CDP Elmont CDP Elwood CDP Farmingdale village Farmingville CDP Fire Island CDP Fishers Island CDP Flanders CDP Floral Park village Flower Hill village Fort Salonga CDP Franklin Square CDP Freeport village Garden City Park CDP Garden City South CDP Garden City village Gilgo CDP Glen Cove city Glen Head CDP Glenwood Landing CDP Gordon Heights CDP Great Neck Estates village Great Neck Gardens CDP Great Neck Plaza village Great Neck village Great River CDP Greenlawn CDP Greenport village Greenport West CDP Greenvale CDP Halesite CDP Hampton Bays CDP Harbor Hills CDP Harbor Isle CDP Hauppauge CDP Head of the Harbor village Hempstead village

9 88 76 44 54 2 1 10 119 45 61 159 128 36 17 245 1 104 24 38 16 23 8 99 69 6 76 6 9 10 26 63 5 8 115 11 52

FHA 1 93 11 10 45 0 0 7 9 0 4 34 115 2 6 3 0 24 2 2 3 0 0 0 1 0 23 0 2 0 2 28 0 4 22 0 79

Other govt backed Total 0 9 4 185 3 90 4 58 10 109 0 2 0 1 1 17 0 128 0 45 2 67 7 200 10 253 1 39 0 23 2 250 0 1 3 131 2 28 0 39 0 19 0 23 0 8 0 99 2 72 0 6 2 101 1 7 1 12 0 10 1 29 2 93 0 5 0 12 3 140 0 12 12 143

15

FHA as % of total 7.14% 50.49% 12.22% 17.24% 41.66% 0.94% 13.64% 38.71% 7.03% 0.00% 5.97% 17.00% 45.45% 5.13% 26.09% 1.20% 35.48% 18.32% 7.14% 4.69% 15.79% 0.00% 0.00% 0.00% 1.39% 0.00% 22.77% 0.00% 13.64% 0.00% 7.14% 30.22% 0.00% 32.35% 15.71% 0.00% 55.24%

Subprime as % of total, 2005-6 9.79% 58.82% 29.39% 23.75% 37.49% 37.52% 22.26% 46.59% 19.91% 12.96% 15.49% 32.99% 54.35% 30.14% 21.71% 14.63% 25.37% 33.02% 20.13% 10.48% 63.41% 7.03% 8.31% 3.88% 9.73% 24.46% 36.72% 34.01% 22.26% 9.26% 18.37% 36.33% 7.03% 35.03% 20.93% 9.34% 65.93%

Lost annual savings $928 $81,215 $11,578 $8,375 $32,130 $18 $173 $4,365 $10,283 $0 $4,605 $32,530 $85,003 $2,663 $7,203 $4,703 $283 $24,735 $1,918 $2,758 $1,650 $0 $0 $0 $1,485 $0 $19,123 $0 $1,545 $0 $2,488 $25,618 $0 $3,260 $23,250 $0 $49,903

LoanType

Conv.

Herricks CDP Hewlett Bay Park village Hewlett CDP Hewlett Harbor village Hewlett Neck village Hicksville CDP Holbrook CDP Holtsville CDP Huntington Bay village Huntington CDP Huntington Station CDP Inwood CDP Island Park village Islandia village Islip CDP Islip Terrace CDP Jamesport CDP Jericho CDP Kensington village Kings Park CDP Kings Point village Lake Grove village Lake Ronkonkoma CDP Lake Success village Lakeview CDP Lattingtown village Laurel CDP Laurel Hollow village Lawrence village Levittown CDP Lido Beach CDP Lindenhurst village Lloyd Harbor village Locust Valley CDP Long Beach city Lynbrook village Malverne Park Oaks CDP

30 3 43 10 4 193 132 91 15 145 122 30 10 8 85 18 10 97 8 97 17 51 80 25 14 14 9 18 32 276 21 83 41 20 305 151 4

FHA 0 0 7 1 0 39 61 41 1 22 71 10 15 12 41 16 1 4 0 20 0 24 51 0 12 0 0 0 1 112 1 62 0 4 31 33 1

Other govt backed Total 0 30 0 4 0 50 0 11 0 4 5 237 11 204 9 140 0 17 2 169 4 197 0 40 0 25 0 20 1 127 1 35 2 13 1 102 0 8 6 123 0 17 5 80 3 134 0 25 0 26 0 15 0 10 0 18 0 33 26 414 0 23 10 155 0 41 0 24 5 341 8 192 0 5

16

FHA as % of total 0.00% 8.00% 14.00% 8.00% 8.00% 16.46% 29.90% 28.99% 7.14% 12.83% 36.04% 25.00% 60.00% 60.00% 32.28% 45.71% 9.52% 3.89% 0.00% 16.43% 0.00% 30.00% 38.06% 0.00% 46.15% 3.33% 5.13% 0.00% 3.03% 27.05% 6.25% 40.00% 0.00% 16.67% 9.09% 17.19% 16.13%

Subprime as % of total, 2005-6 19.40% 16.03% 25.50% 16.03% 16.03% 29.73% 28.77% 30.39% 18.37% 16.64% 45.15% 54.69% 43.09% 55.46% 33.44% 32.05% 31.28% 12.38% 8.31% 21.87% 4.02% 32.45% 31.57% 6.20% 64.37% 10.61% 16.83% 9.52% 17.70% 33.04% 21.64% 33.15% 10.00% 25.78% 24.54% 27.41% 20.88%

Lost annual savings $0 $368 $7,355 $1,150 $405 $36,403 $51,420 $30,508 $1,423 $26,390 $53,700 $8,245 $11,413 $8,105 $31,145 $11,110 $1,145 $5,425 $0 $18,795 $0 $18,473 $38,785 $0 $9,465 $653 $525 $0 $1,965 $95,540 $1,655 $46,020 $0 $4,093 $34,578 $31,728 $845

LoanType

Conv.

Malverne village Manhasset CDP Manhasset Hills CDP Manorhaven village Manorville CDP Massapequa CDP Massapequa Park village Mastic Beach CDP Mastic CDP Matinecock village Mattituck CDP Medford CDP Melville CDP Merrick CDP Middle Island CDP Mill Neck village Miller Place CDP Mineola village Montauk CDP Moriches CDP Mount Sinai CDP Munsey Park village Muttontown village Napeague CDP Nesconset CDP New Cassel CDP New Hyde Park village New Suffolk CDP Nissequogue village North Amityville CDP North Babylon CDP North Bay Shore CDP North Bellmore CDP North Bellport CDP North Great River CDP North Haven village North Hills village

69 45 23 19 71 136 115 19 23 7 26 109 108 163 76 8 59 132 16 11 72 34 32 1 89 14 68 1 14 20 92 15 149 28 25 7 43

FHA 14 0 0 7 20 24 21 53 47 0 2 84 7 22 26 0 25 10 1 9 18 0 0 0 18 35 5 0 0 52 59 58 24 25 7 0 0

Other govt backed Total 1 84 1 46 1 24 0 26 6 97 2 162 1 137 6 78 5 75 0 7 2 29 7 200 1 116 4 189 2 104 0 8 4 88 1 143 0 17 1 21 4 94 0 34 0 32 0 1 8 115 1 50 2 75 0 2 1 14 0 72 4 155 1 74 9 182 4 56 1 33 0 7 0 43

17

FHA as % of total 16.62% 0.00% 0.00% 26.92% 20.90% 14.81% 15.33% 67.95% 62.61% 3.33% 5.13% 42.00% 6.03% 11.64% 25.00% 3.33% 28.36% 6.99% 5.88% 42.76% 19.18% 0.00% 0.00% 18.18% 15.65% 70.00% 6.32% 19.05% 0.00% 72.46% 38.06% 78.40% 13.19% 44.54% 21.21% 0.00% 0.00%

Subprime as % of total, 2005-6 26.31% 18.54% 9.58% 20.09% 31.81% 18.00% 18.62% 52.76% 51.24% 10.61% 16.83% 38.46% 18.22% 21.46% 36.85% 10.61% 24.77% 20.38% 23.10% 45.70% 22.91% 9.32% 11.61% 31.56% 21.40% 62.67% 24.92% 13.95% 9.34% 62.71% 38.48% 60.48% 26.36% 54.43% 35.08% 9.60% 6.20%

Lost annual savings $13,898 $0 $0 $9,555 $18,140 $26,375 $21,623 $19,778 $23,473 $303 $1,595 $55,830 $7,285 $23,455 $16,053 $373 $20,768 $10,278 $1,295 $5,040 $15,818 $0 $0 $193 $17,318 $25,985 $5,558 $308 $0 $32,875 $45,693 $37,985 $22,155 $14,070 $5,778 $0 $0

LoanType

Conv.

North Lindenhurst CDP North Lynbrook CDP North Massapequa CDP North Merrick CDP North New Hyde Park CDP North Patchogue CDP North Sea CDP North Valley Stream CDP North Wantagh CDP Northampton CDP Northport village Northville CDP Northwest Harbor CDP Noyack CDP Oak Beach-Captree CDP Oakdale CDP Ocean Beach village Oceanside CDP Old Bethpage CDP Old Brookville village Old Field village Old Westbury village Orient CDP Oyster Bay CDP Oyster Bay Cove village Patchogue village Peconic CDP Plainedge CDP Plainview CDP Plandome Heights village Plandome Manor village Plandome village Point Lookout CDP Poquott village Port Jefferson Station CDP Port Jefferson village Port Washington CDP

25 6 125 83 91 25 24 81 91 1 45 8 32 24 2 62 0 242 56 19 7 17 3 37 21 101 2 51 207 9 8 13 9 7 35 55 149

FHA 30 1 20 15 12 24 1 31 22 1 5 1 1 2 1 12 0 66 3 0 1 0 1 5 0 25 1 9 11 0 0 0 1 1 23 4 3

Other govt backed Total 3 58 0 7 3 148 3 101 0 103 5 54 0 25 4 116 2 115 0 2 2 52 2 10 1 33 1 27 0 2 2 76 0 0 8 316 0 59 0 19 0 8 0 17 0 4 1 43 0 21 5 131 0 3 7 67 1 219 0 9 0 8 0 13 0 9 0 8 4 62 1 60 2 154

18

FHA as % of total 51.72% 17.65% 13.51% 14.85% 11.65% 44.44% 2.51% 26.72% 19.13% 38.71% 9.62% 9.52% 1.56% 8.59% 35.48% 15.79% 0.00% 20.89% 5.08% 0.00% 7.50% 0.27% 13.64% 11.63% 0.00% 19.08% 19.05% 13.43% 5.02% 0.00% 0.00% 0.00% 6.25% 7.50% 37.10% 7.20% 2.05%

Subprime as % of total, 2005-6 42.32% 34.33% 18.86% 21.09% 20.73% 40.40% 25.52% 48.38% 26.10% 46.63% 16.74% 31.28% 18.68% 18.86% 30.74% 16.92% 25.37% 26.94% 25.39% 11.61% 13.81% 13.04% 22.26% 22.03% 9.52% 37.69% 13.95% 27.51% 18.25% 8.54% 8.54% 8.54% 21.64% 13.81% 32.18% 18.59% 16.25%

Lost annual savings $21,818 $1,233 $18,615 $15,090 $13,908 $14,820 $785 $27,073 $20,080 $560 $5,103 $895 $725 $2,983 $625 $10,860 $0 $62,760 $3,020 $0 $515 $73 $540 $4,515 $0 $17,060 $603 $7,708 $12,648 $0 $0 $0 $695 $538 $17,100 $4,425 $4,628

LoanType

Conv.

Port Washington North village Quiogue CDP Quogue village Remsenburg-Speonk CDP Ridge CDP Riverhead CDP Riverside CDP Rockville Centre village Rocky Point CDP Ronkonkoma CDP Roosevelt CDP Roslyn Estates village Roslyn Harbor village Roslyn Heights CDP Roslyn village Russell Gardens village Saddle Rock Estates CDP Saddle Rock village Sag Harbor village Sagaponack village Salisbury CDP Saltaire village Sands Point village Sayville CDP Sea Cliff village Seaford CDP Searingtown CDP Selden CDP Setauket-East Setauket CDP Shelter Island CDP Shelter Island Heights CDP Shinnecock Hills CDP Shirley CDP Shoreham village Smithtown CDP Sound Beach CDP

FHA 26 6 9 12 79 52 7 230 63 93 17 17 13 62 37 7 4 7 19 2 92 0 30 91 41 89 45 61 104 11 8 9 64 3 167 33

Other govt backed Total

0 0 1 3 22 14 4 9 52 44 51 0 0 1 0 0 0 0 0 0 22 0 1 27 7 20 0 68 19 1 1 3 92 2 27 20

1 0 0 2 7 4 0 2 7 6 2 0 0 0 0 0 0 0 0 0 3 0 0 3 1 3 0 6 3 0 0 1 19 0 8 3

19

28 6 10 18 108 70 11 241 122 143 70 17 13 63 37 7 4 7 20 2 117 0 31 121 49 112 45 135 126 12 9 12 175 5 202 56

FHA as % of total 0.00% 0.00% 9.09% 17.80% 20.23% 20.29% 38.71% 3.73% 42.45% 30.77% 72.86% 0.05% 1.17% 1.58% 0.00% 0.00% 0.00% 0.00% 0.77% 8.70% 18.56% 0.00% 1.64% 22.31% 14.29% 17.86% 0.00% 50.12% 14.86% 9.52% 9.52% 21.74% 52.57% 33.33% 13.43% 36.08%

Subprime as % of total, 2005-6 13.06% 30.26% 23.28% 22.73% 30.60% 35.64% 46.63% 17.36% 37.55% 32.94% 70.39% 7.85% 8.62% 17.36% 7.85% 8.31% 7.03% 7.03% 14.06% 13.10% 31.15% 25.37% 12.21% 22.32% 15.48% 23.19% 14.76% 42.38% 19.51% 15.05% 15.05% 28.30% 48.76% 17.09% 20.12% 33.72%

Lost annual savings $0 $0 $823 $3,483 $16,900 $9,310 $2,843 $10,785 $29,930 $32,583 $31,933 $15 $230 $1,690 $0 $0 $0 $0 $215 $295 $20,338 $0 $773 $24,468 $7,300 $18,213 $0 $42,063 $18,825 $1,503 $1,183 $2,835 $46,340 $1,433 $25,880 $11,960

LoanType

Conv.

South Farmingdale CDP South Floral Park village South Hempstead CDP South Huntington CDP South Valley Stream CDP Southampton village Southold CDP Springs CDP St. James CDP Stewart Manor village Stony Brook CDP Stony Brook University CDP Syosset CDP Terryville CDP Thomaston village Tuckahoe CDP Uniondale CDP University Gardens CDP Upper Brookville village Valley Stream village Village of the Branch village Wading River CDP Wainscott CDP Wantagh CDP Water Mill CDP West Babylon CDP West Bay Shore CDP West Hampton Dunes village West Hempstead CDP West Hills CDP West Islip CDP West Sayville CDP Westbury village Westhampton Beach village Westhampton CDP Wheatley Heights CDP

82 7 14 62 37 13 37 42 87 14 81 0 146 42 18 6 33 59 15 179 12 50 6 96 10 147 33

FHA 24 2 9 20 15 2 2 7 11 1 12 1 3 27 0 1 63 0 0 114 2 15 0 14 1 122 12

0 105 42 154 25 64 12 17 11

0 26 9 52 7 17 0 1 12

Other FHA as govt % of backed Total total 4 110 21.82% 0 9 18.18% 0 23 39.13% 0 82 24.39% 1 53 28.30% 0 15 13.33% 1 40 5.00% 0 49 14.29% 5 103 10.68% 0 15 8.33% 7 100 12.06% 0 1 100.00% 1 150 2.00% 4 73 36.99% 0 18 0.00% 0 7 7.19% 1 97 64.95% 0 59 0.00% 0 15 0.00% 10 303 37.62% 0 14 11.76% 3 68 22.06% 0 6 1.56% 3 113 12.39% 0 11 7.20% 10 279 43.72% 0 45 26.67% 0 3 1 10 1 2 0 0 0

20

0 134 52 216 33 83 12 18 23

0.00% 19.40% 17.31% 24.07% 21.21% 20.48% 0.00% 7.67% 52.95%

Subprime as % of total, 2005-6 30.13% 58.17% 39.70% 23.79% 40.34% 17.70% 20.66% 33.48% 23.64% 26.73% 15.16% 15.36% 16.29% 38.53% 8.31% 28.13% 63.19% 9.70% 11.61% 45.21% 21.99% 25.86% 18.68% 20.39% 18.38% 40.70% 25.37%

Lost annual savings $21,235 $1,435 $7,875 $17,275 $14,990 $2,248 $2,285 $8,548 $10,303 $1,253 $13,753 $1,510 $3,990 $20,060 $0 $550 $49,435 $0 $0 $102,473 $1,808 $9,520 $143 $14,570 $1,053 $91,458 $9,225

21.44% 40.18% 20.98% 25.33% 28.21% 42.68% 30.26% 25.07% 55.30%

$0 $22,703 $9,450 $44,795 $6,060 $17,003 $0 $855 $10,068

LoanType

FHA 4 1 12 1 26 19

Other govt backed Total 2 40 0 84 0 158 0 7 0 42 2 56

FHA as % of total 10.00% 1.19% 7.59% 8.00% 62.68% 33.48%

14781 4789

633 20203

23.70%

Conv.

Williston Park village Woodbury CDP Woodmere CDP Woodsburgh village Wyandanch CDP Yaphank CDP Total

34 83 146 6 15 35

21

Subprime as % of total, 2005-6 16.04% 17.69% 22.83% 16.03% 66.73% 37.49%

Lost annual savings $4,528 $1,160 $13,350 $708 $14,178 $13,360 $3,817,248

ENDNOTES 1

See https://portal.hud.gov/hudportal/documents/huddoc?id=FHA_SF_MarketShare_2015Q1.pdf FHA originations dropped in FY 2011-2014 as premiums rose and the market recovered, and rose again during 2015-2016.

3 Christopher Niedt and Marc Silver. An Uneven Road to Recovery: Place, Race, and Mortgage Lending on Long Island. Hempstead, NY: National Center for Suburban Studies/Long Island Housing Services, December 2014.

Available at www.hofstra.edu/pdf/academics/css/ncss-report-uneven-road.pdf.

4 See HUD’s Mortgage Letter 2015-01, available at https://portal.hud.gov/hudportal/documents/huddoc?id=1501ml.pdf.

5 This assumes that 2017 FHA lending matches or exceed that of 2015. See Appendix A and footnote 9 below.

6 Christopher Niedt and Marc Silver. An Uneven Road to Recovery: Place, Race, and Mortgage Lending on Long Island. Hempstead, NY: National Center for Suburban Studies/Long Island Housing Services, December 2014.

Available at www.hofstra.edu/pdf/academics/css/ncss-report-uneven-road.pdf.

7 Nearly all depository and non-depository lenders operating in metropolitan areas are required to submit loan application registers which are included in HMDA data. For an explanation of the exceptions, see https://www.ffiec.gov/hmda/pdf/2013guide.pdf.

8 The data include a range of demographic variables describing each borrower (e.g., race, ethnicity, and income), as well as basic information about the loan itself (e.g., purpose, loan amount conventional/FHA/VA). Some important variables are notably excluded, such as applicant credit scores and detailed loan terms; this makes it difficult, for example, to determine if people of color with the same borrower profiles as white applicants receive FHA loans at a disproportionate rate (due to a dual credit market, discrimination, etc.).

9 The eight ethnicity and race variables for applicants and co-applicants are recoded into a single variable. All Latino/a applicants and co-applicants were coded “Latino/a” in the new summary variable, and the remaining applicants were coded “multi-racial” if they listed more than one racial category. If applicants had a co-applicant with a different race/ethnicity, the summary variable was again coded “multi-racial”. Loan type includes conventional, FHA, and other government-loans (primarily Veterans Affairs, plus four Farm Service Agency/Rural Housing Service).

10 FHA purchase endorsements rose from FY 15 to FY 16, and quarterly endorsements and endorsement volumes rose from 2015 to 2016, except for a 1% decline from 2015Q4 to 2016Q4 – see https://portal.hud.gov/hudportal/documents/huddoc?id=2016fhaannualreport1.pdf. Several other independent factors could also affect FHA loan volume, such as the cost of FHA insurance relative to PMI. 2

22