The Housing Scene by Lew Sichelman

The Housing Scene For December 18, 2015

Each year, like clockwork, Uncle Sam calls all of the country's mortgage lenders on the carpet to prove they are making mortgage money available to everybody, everywhere -- not skipping over an ethnic group here or a county there.

There's an awful lot of data in the report that some call the mortgage census -- formally, the Home Mortgage Disclosure Act (HMDA), created by Congress in 1975. The law was intended to give hard data on lending and mortgage investment -- or the lack of it -- to minority groups and other communities.

The data collected under HMDA offers a cornucopia of mortgage information, like which companies are the largest lenders, what percentage of loans were on single-family houses, how many loans were sold by lenders into the secondary mortgage market, and how many first liens there were versus other liens.

2014's epic report has now been released: It includes numbers from 7,000 lenders and information from nearly 10 million loan applications. So what was 2014 like for the mortgage market? According to the Federal Reserve's HMDA summary, "House prices continued their upward trend evident since 2012 and mortgage interest rates declined throughout the year, although rates remained slightly higher than the historical lows reached in late 2012 and early 2013."

How difficult was it to obtain financing last year? "While mortgage credit stayed generally tight, conditions appeared to ease somewhat over the course of the year as the fraction of mortgage lending to lower-credit borrowers increased," according to the Fed. "However, growth in new housing construction was slow throughout the year, suggesting some persistent softness in new housing demand."

What percentage of the nearly 10 million applications in 2014 actually became mortgages? About 6 million. The dollar volume of those loans totaled almost $1.4 trillion, which is lower than 2013's volume, but somewhat higher than most industry pundits predicted.

The undisputed mortgage champ was Wells Fargo Bank, which made loans at a dollar volume that was twice what the next two banks originated, combined. The giant bank's total of $111.1 billion, about 8 percent of the total national volume, dwarfed Quicken Loans and Chase, which had about 4 percent each (about $56 billion apiece).

In professional football's annual draft, the last player chosen is called Mr. Irrelevant. In the lending world, that title would go to Affinity Bank, which lent only $20,000 in home loans in 2014. Rapid City, South Dakota's Telco Federal Credit Union was next to last, at a mere $24,000.

In going over the numbers, it's easy to lose sight of HMDA's original intention, which was to track loans to minorities and cull out lenders who were redlining or not making loans in the communities where they were located. But those figures are in there, too:

Of the $2.5 trillion in applications made to lenders last year, about 59 percent came from whites, and just over 20 percent came from minorities (blacks, Latinos, Asians, American Indians, native Hawaiians or people of mixed race). More than 1 in 5 applications were in the "unknown" or "N/A" categories, because many people do not fill in the "race" blank. But with minorities now around 38 percent of the American population, it appears that they continue to be underserved.

The disparity is even larger in the dollar volume of loans actually made, with whites getting 63 percent of all mortgage money last year.

Beyond those figures, HMDA also offers a wide-angle snapshot of the country's appetites for home loans. Of the 10 million applications, 89 percent were for owner-occupied units, with just 10 percent non-owner-occupied. Applications to purchase homes were just slightly more popular (51 percent) than those to refinance loans (41 percent), with just seven percent seeking home-improvement lending.

Together, the 10 million applicants sought nearly $2.5 trillion in funding, and 6 million borrowers were approved for $1.4 trillion. More than 9 in 10 sought amounts at or lower than the "conforming" mortgage ceiling imposed on investors like Fannie Mae, Freddie Mac and Ginnie Mae. The rest were seeking "jumbo" mortgages, or loans made in amounts above the $417,000 conforming ceiling. (The ceiling is higher for many high-priced areas).

The average loan amount for a first-lien mortgage last year was $233,000.

HMDA allows interested parties to track data by state, county, metro area and even census tracts to see how many -- or how few -- loans were made. Take Corson County, South Dakota. Only four mortgages were made last year, at an average of less than $100,000, in this remote area near the North Dakota border. In other words, the county is hurting for mortgages.

Corson County is wholly within the borders of the Standing Rock Indian Reservation, but it would be a mistake to think that American Indians comprise all of the 4,000 people who reside there. About a third of the population is white, and a little more than a third of the $326,000 in mortgages made there in 2014 went to whites. About 17 percent went to American Indians.

Freelance writer Mark Fogarty contributed to this report. The HMDA data was analyzed for the Housing Scene by