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2011 Lending Data Reveals Declining Conventional, FHA Activity

The ""Federal Financial Institutions Examination Council"":http://www.ffiec.gov/ (FFIEC) released Tuesday data on mortgage lending transactions in 2011 at 7,632 financial institutions in the United States.

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The released data covers 2011 lending activity at banks, savings associations, credit unions, and mortgage companies covered by the Home Mortgage Disclosure Act (HMDA). The data includes disclosure statements for each financial institution, aggregate data for each metropolitan statistical area (MSA), nationwide summary statistics for lending patterns, and loan/application registers (LARs) for each institution.

The number of reporting institutions in 2011 fell nearly 4 percent from 2010, continuing a downward trend that started in 2006. The decline reflects mergers, acquisitions, and the closing of some institutions.

The data showed that the total number of originated loans of all types and purposes fell by about 780,000 â€" 10 percent â€" from 2010 to 2011, partly because of a 13 percent decline in refinancings. The overall drop in refinancings was the result of declines in conventional and FHA activity, as data revealed that VA-related refinancing activity actually rose 41 percent.

The VA market share of home purchase lending also increased in 2011, rising about 1 percentage point to 8 percent. While there still seems to be a heavy reliance on loans backed by FHA insurance, its share of first-lien home purchase lending fell 5 percentage points to 31 percent.

As far as loan pricing, the data reflected the second full year of HMDA data reported under revised loan pricing rules which govern whether a loan is classified as “higher-priced.” Lenders now report on loans with annual percentage rates (APRs) that are 1.5 percentage points above the average prime offer rates (APORs) for first lien loans or 3.5 percentage points above the APORs for junior lien loans.

The data revealed that a small minority of first-lien loans in 2011 have APRs that exceeded loan price reporting thresholds. The principal exception was for conventional first-lien loans used to purchase manufactured homes â€" 82 percent exceeded the reporting threshold.

For conventional first-lien loans used to purchase site-built properties, about 3.9 percent of reported loans exceeded the threshold (up from 3.3 percent in 2010). The incidence of higher-priced lending for FHA-insured loans on site-built properties was virtually the same, while loans backed by VA guarantees were less likely to be classified as higher-priced (only about 0.4 percent incidence).

The 2011 data also showed a possibly discriminatory trend regarding the disposition of conventional home loan applications. Black and Hispanic white applicants both experienced higher denial rates than non-Hispanic white applicants, a trend similar to those noticed in earlier years. The denial rate for Asian applicants was virtually the same as that for non-Hispanic white applicants.

HMDA data is designed to promote market transparency and facilitate fair lending examinations and enforcement where it’s necessary. Other data is examined alongside HDMA data to determine a possible violation of fair lending laws.

About Author: Tory Barringer

Tory Barringer began his journalism career in early 2011, working as a writer for the University of Texas at Arlington's student newspaper before joining the DS News team in 2012. In addition to contributing to DSNews.com, he is also the online editor for DS News' sister publication, MReport, which focuses on mortgage banking news.
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