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The Nation's Housing Finance System Remains Closed to African-American & Latino Consumers Despite Strong Economic Recovery in 2015

September 29, 2016
Mortgage Lending
Research

The 2015 mortgage data submitted by lenders under the Home Mortgage Disclosure Act (HMDA) reflects a market that troublingly continues to underserve important market segments. For people of color and low- to moderate-income families, access to credit remains tight. The data shows how lenders and secondary market actors underserve these consumers even as large banks continue to have access to U.S. Treasury funds at historically low rates. African-American, Hispanic, and low- to moderate-income borrowers all received a low share of home purchase loans and were more likely to be served by government-backed loan programs than the conventional market. These consumers are also paying more for mortgages than other borrowers.

Highlights from the 2015 HMDA data include:

  • The share of loans made to African-American and Hispanic borrowers in 2015 rose modestly, but remained well below the population share they compose. In 2015, African-Americans received 5.5 percent of loans up from 5.2 percent in 2014; Hispanic borrowers received 8.3 percent up from 7.9 percent in 2014. These percentages fall far short of the share of the U.S populations that these groups represent. African-Americans compose 13.3% and Hispanics 17.6% of the total national population.
  • The share of loans made to low and moderate-income borrowers rose slightly in 2015 to 28 percent from 27.1 percent. Although modestly higher than the share in 2014 the 2015 share was lower than it was from 2009 to 2013.
  • Most home purchase loans made to African-American and Hispanic borrowers continued to be through government insured programs (including FHA, VA and others) and reliance on these programs continued to increase. In 2015, 70.2 percent of loans to African-American borrowers and 62.6 percent of loans to Hispanic borrowers were government backed. These shares compare to just 36.0 percent of loans made to non-Hispanic white borrowers.
  • In keeping with recent trends, a very small share of conventional home-purchase loans were made to African-American and Hispanic borrowers. In 2015, just 2.7 percent of conventional home-purchase loans were made to African-American borrowers and just 5.1 percent of these loans were made to Hispanic borrowers. These percentages are virtually unchanged from the levels in 2014.
  • The share of African-American and Hispanic borrowers that received “higher-cost” loans fell dramatically from 25.6 and 28.4 percent respectively in 2014 to 16.2 and 18.5 percent respectively in 2015. This is a result of changes in the cost structure of government-insured loans (including FHA). The shares, however, remained well above the share of non-Hispanic white borrowers that received higher-costs loans, just 6.2 percent in 2015
  • The share of both home-purchase and refinance loans made by non-depository lenders continued to increase. In 2015, 50 percent of all first-lien owner-occupied home-purchase loans were made by non-depository mortgage lenders. This share has been increasing in recent years and is the highest level since 1995.