The Home Mortgage Explorer provides lending estimates produced from publicly available Home Mortgage Disclosure Act (HMDA) data. HMDA requires lending institutions above a certain asset size with a branch office located in a metropolitan area to submit loan-level information on the mortgage applications they receive, regardless of whether those applications are eventually originated.1 The Home Mortgage Explorer provides lending statistics for first-lien mortgages for 1- to 4-family, owner-occupied housing units in the 50 states and Washington, D.C., for the years 2010 to 2017.2 Both approved and denied applications are analyzed. Applications not included in the Home Mortgage Explorer include those withdrawn or closed for incompleteness, preapproval requests, and loans purchased by the respondent’s institution.
For questions pertaining to the Home Mortgage Explorer, please contact Kyle DeMaria (firstname.lastname@example.org), Lisa Nelson (email@example.com), Layisha Bailey (firstname.lastname@example.org), or Matthew Klesta (email@example.com).
Originations by Geography. This tab details the distribution of mortgages originated by income category and allows for the comparison of multiple locations side-by-side.
Originations by Year. For a single geography, this tab graphs annual trends in mortgage originations by income.
Denials by Geography. Unlike in the originations tabs, where the percent of mortgage originations in each income category is calculated, the denial figures do not sum to 100 percent. Instead, denial rates represent the percentage of applications in each income category denied by lenders. The figures presented under the “By Reason Given” option indicate how frequently a specific denial reason is reported, expressed as a percentage of the total number of denied applications where any reason is reported (see Reason Given for more information). In this tab, denial figures for multiple geographies can be compared with one another.
Denials by Year. For a single geography, this tab graphs the annual trends in denial figures by loan characteristic and income.
Originated Mortgages are mortgages that have been approved and for which loan capital has been issued.
Denial Rates are calculated by dividing the number of denied mortgage applications by the total number of originations, approvals that were not originated, and denied applications.
Metro geographies include metropolitan statistical areas (MSAs), metropolitan divisions (MDs), and nonmetropolitan portions of states. MSAs are economic and population centers, and some particularly large MSAs are composed of MDs; for example, the Philadelphia-Camden-Wilmington, PA-NJ-DE-MD MSA includes four MDs. Both MSAs and MDs are composed of counties or county equivalents. The Home Mortgage Explorer uses 2015 MSA and MD boundaries as established by the U.S. Office of Management and Budget (OMB).3 Nonmetropolitan portions of states include counties or county-equivalents that fall outside MSA boundaries.
Loan Purpose refers to how the mortgage capital will be used by the borrower. Home purchase and home improvement mortgages are intended for the purchase or repair of a home, respectively. Refinance loans are transactions in which a new mortgage pays off and replaces an existing mortgage and the borrower receives a new interest rate and/or loan term.
Loan Type specifies whether a federal agency is involved in insuring or guaranteeing the mortgage. Conventional mortgages are not insured or guaranteed by any federal agency. FHA mortgages are insured by the Federal Housing Administration (FHA), VA mortgages are guaranteed by the U.S. Department of Veterans Affairs (VA), FSA mortgages are guaranteed by the U.S. Department of Agriculture’s (USDA) Farm Service Agency (FSA), and RHS mortgages are guaranteed by the USDA’s Rural Housing Service (RHS). By lowering down payment requirements or minimum credit scores, for example, these programs are intended to expand access to credit for borrowers that may have difficulty qualifying for a conventional loan. The federal agency providing the insurance or guarantee is responsible for repaying at least a portion of the loan to the private lender if the borrower cannot.
Reason Given refers to the reasons reported by a lender for denying a mortgage application. A lender can choose to report up to three reasons, with no single reason taking precedence. The Home Mortgage Explorer indicates how frequently a reason is reported, expressed as a percentage of the total number of denied applications where any reason is given (see Denials by Geography above for an example interpretation). Estimates are provided for four common reasons given: an elevated debt-to-income ratio, poor or insufficient credit history, collateral, or insufficient down payment.
Applicant or Neighborhood Income is used to classify mortgage originations and denials according to the applicant’s income or the median family income (MFI) of the census tract (“neighborhood”) in which the housing unit is located.
Low/Moderate/Middle/Upper/Unspecified Income are income categories determined by taking the applicant’s or neighborhood’s income and dividing by the MFI of the metro area, metro division where available, or state nonmetropolitan area in which the housing unit is located. In more conceptual terms, the ratio describes how the applicant or neighborhood income relates to that of the surrounding area. In determining applicant income categories, area MFIs were taken from the Federal Financial Institutions Examination Council’s (FFIEC) 2010 to 2017 Median Family Income Reports,4 which rely on the 2000 Census and the 2011 to 2015 American Community Survey 5-year estimates and extrapolate incomes for subsequent years. Neighborhood income categories were obtained from the FFIEC’s 2017 Census Flat File, which relies on 2011–2015 American Community Survey estimates and is the official source of neighborhood income categories for CRA purposes.5 If the location (county or census tract) of the property is missing or the applicant’s income is missing, the loan is categorized as “Unspecified Income.” Otherwise, originations and denials are classified into one of four categories based on the Community Reinvestment Act’s definition of the relationship of the applicant’s or neighborhood’s income to the area MFI:
See Comparability Across Time below to learn more about how applicant and neighborhood income categories were assigned.
Comparability Across Time. One challenge in studying mortgage lending trends by income is that the classification of an applicant or neighborhood into an income category is dependent on the income of the surrounding reference area, and the boundaries of that reference metropolitan or nonmetropolitan area can change over time. Counties can be added to or removed from metropolitan and nonmetropolitan areas due to changes in regional commuting patterns. As a result, when metro boundaries change, an applicant in one year may be classified differently than a similar applicant in a subsequent year because of the boundary change’s effect on the area MFI. In order to accurately observe trends in lending, the Home Mortgage Explorer uses the 2015 MSA definitions throughout the study period. For metro areas that did not experience a boundary change during the study period, the area income provided by the FFIEC is used. Where metro boundaries changed during the study period, an alternative area MFI for the updated 2015 geographic definition is used. With this approach, trends in mortgage lending are due to actual changes in the market rather than to boundary changes.
Improved Locational Information. The raw HMDA data identify the census tract, county, state, and MSA or MD in which the property is located. In a number of cases, HMDA records were missing an MSA or MD identifier but had a state and county identifier. The Home Mortgage Explorer fills in these missing MSA or MD fields when state and county data are available. As a result, the Home Mortgage Explorer uses all available data to locate mortgages and to accurately produce metro figures.