Mortgage bankers set the mortgage industry pace in originating minority home loans in 1993, but a soon-to-be-released study of HMDA data shows that while mortgage bankers top all other bank groups in minority lending, they had a worse record than other lending groups overall in approvals and denials of conventional loans to blacks.
The study, conducted by the Mortgage Bankers Association based on 1993 Home Mortgage Disclosure Act figures (see chart, Page 6), shows that mortgage bankers approval and denial rates for home purchase loans for blacks and all other minority groups as well led the industry.
Mortgage bankers had a 62.6% approval rate for black home purchase loans while the rest of the mortgage lending industry registered a cumulative 59.4%.
Mortgage bankers also had a lower cumulative denial rate for blacks in that category, turning away 27.6% while all other lenders combined for a 31.2% denial rate.
But while mortgage bankers led the way in total home loan purchases to blacks, there seems to be trend toward pointing black borrowers toward FHA loans rather than to conventional lending.
The MBA data show that mortgage bankers nearly doubled the total origination volume of other lending groups in lending to blacks with 107,882 loans in 1993 while other lending groups managed just a combined 54,497. The conventional lending habits for mortgage bankers were different, however. Mortgage banks totaled 40,781, roughly the same as the other lending groups 40,541. By contrast, mortgage bankers made 67,101 government home purchase loans to blacks, more than four times that of other lending groups combined 13,956.
Mortgage bankers approval and denial rates also contrasted between government and conventional black applicants. The mortgage banks conventional loan approval rate for all minority applicants was higher than all other lending groups with one exception, that being black applicants.
Black applicants for conventional loans were approved by mortgage bankers 57.4% of the time. Other lenders approved black applicants for conventional loans slightly more often, at a rate of 58.2%. Denial rates for black applicants weren't as good for mortgage bankers either, just 34.6%. Other lenders turned away fewer, 33.4%.
Although mortgage bankers can boast the best overall approval rates and the lowest denial rates, the data nonetheless lends itself to the theory that mortgage bankers more often than not direct black applicants toward FHA loans first.
Not everyone thinks so, including one unlikely defendant. Allan Fishbein, director of the Centers for Community Change, said mortgage banks developed a niche in government lending when many banks and thrifts wouldn't. Many have since become specialists in that field and maintained that tradition, hence the trend toward those government loans.
Fishbein also said that because the MBA data did not show whether mortgage banking affiliates of banks and thrifts were incorporated into the mortgage banking figures, a better barometer of mortgage bankers performance might be to compare the approval and denial statistics of mortgage bank subsidiaries and their bank and thrift counterparts.
The MBA data may be expanded Dec. 5 when the MBA releases its third quarter delinquency statistics. Other data breakdowns, including comparisons of mortgage banks against specific lending groups, are also expected.