HMDA Results – What Shape Is Your Data In?
Written by: Bill Dolan, CMB, AMP
The Federal Financial Institutions Examination Council has published its 2023 mortgage lending transactions reported under Home Mortgage Disclosure Act (HMDA) which included 5,113 U.S. Financial Institutions, consisting of banks, savings associations, credit unions, and mortgage companies. HMDA data is the most comprehensive source of publicly available information on mortgage market activity. The Snapshot National Loan Level Dataset released contains the national HMDA datasets as of May 1, 2024.
Key observations include: In 2023 the number of reporting institutions increased by about 14.6 percent from 4, 460 in the previous year to 5,113. The 2023 data includes information on 10 million home loan applications, a decrease from the 14.3 million reported in 2022. Among them, 7.7 million were closed-end homes (e.g. a home mortgage loan) and 2.1 million were open-end (e.g. a home equity line of credit). Another 266,000 records are from financial institutions making use of statutory partial exemptions and did not indicate whether they were closed-end or open-end.
The share of mortgages originated by non-depository independent mortgage companies accounted for 68.8 percent of first lien, one-to-four family, site built, owner-occupied home-purchase loans in 2023, up from 60.2 percent in 2022. In terms of borrower race and ethnicity, the share of closed-end home purchase loans for first lien, one-to-four family, site-built, owner-occupied properties made to Black or African American borrowers rose slightly from 8.1 percent to in 2022 to 8.2 percent in 2023. The share made to Hispanic-White borrowers increased from 9.1 percent to 9.9 percent, and the share made to Asian borrowers increased slightly from 7.6 percent to 7.7 percent. In 2023, Black or African American and Hispanic-White applicants experienced denial rates for first lien, one-to-four family, site-built, owner-occupied conventional, closed-end home purchase loans of 16.6 percent and 12.0 percent respectively. Denial rates for Asian and non-Hispanic-White applicants were 9.0 percent and 5.8 percent respectively.
My questions this week are the following:
Do you know what your HMDA data is telling you when it comes to setting the stage for Fair Lending?
Do you know what the three most common errors are in HMDA reporting?
How do you know if a loan is HMDA reportable?
Do you know what the penalty is for violating HMDA?
Do you know the “best practices” associated with HMDA compliance?
SCA’s HMDA and Compliance teams are comprised of industry experts who offer banks, credit unions and other financial institutions the necessary insight to navigate the regulatory waters today.
Not comfortable with how your team is addressing HMDA, and need immediate solutions for HMDA reporting, collection, analysis and training, contact Bill Dolan, Director at: Wdolan@scapartnering.com or call me at (617) 694-2617. Your institution is halfway through the year. Can you afford to wait any longer?
