The following analysis of data compiled under the Home Mortgage Disclosure Act and Regulation C was made by the Federal Financial Institutions Examination Council.
For 1994, the FFIEC prepared 38,750 disclosure statements for 9,858 lenders, with a separate statement for each metropolitan area in which the lender has an office. Submitting data were 5,296 commercial banks; 1,144 savings associations; 2,229 credit unions, and 1,189 mortgage companies (908 were independent entities).
Covered lenders received 10.7 million home loan applications in 1994 (compared with 13.6 million in 1993), and purchased 1 million loans (compared with nearly 1.8 million in 1993). The total volume of home loans and applications (12.2 million) decreased 21% from 1993, largely due to a 51% decline in the number of applications for refinancing.
The data suggest that the affordable-home-loan programs that mortgage originators have initiated in recent years to benefit low-income, moderate- income, and minority households and neighborhoods may be having an impact. The number of conventional home-purchase loans extended to lower-income households went up 27% from 1993 to 1994, while loans to the highest-income households went up 12.5%.
Among racial or ethnic groups, the number of conventional home-purchase loans went up 54.7% for blacks, 42.0% for Hispanics, 23.8% for Native Americans, 18.6% for Asians, and 15.7% for whites.
For conventional home-purchase loans, the denial rates vary among applicants by income and racial or ethnic characteristics. For example, loan applications filed by blacks, Native Americans, and Hispanics are more likely to be turned down than those submitted by whites or Asians.
In 1994, 33.4% of black applicants, 31.6% of Native American applicants, 24.6% of Hispanic applicants, 16.4% of whites applicants, and 12.0% of Asian applicants were denied conventional home-purchase loans. Compared with 1993 data, the denial rates for black, Hispanic, and Asian applicants decreased slightly in 1994, while the denial rates for whites and Native Americans increased.
The comparable denial rates in 1993 were 34.0% for blacks, 27.8% for Native Americans, 25.1% for Hispanics, and 15.3% for whites and 14.6% for Asians.
Differences in the distribution of applicants by income account for some of the differences in loan disposition rates among racial or ethnic groups. Other factors are more important, however, since whites and Asian applicants, in all income groups, had lower rates of denial than black, Native American, or Hispanic applicants. The extent to which racial discrimination may account for these differences is not known.
The HMDA data provide some information on the reasons for denial as cited by lenders. Poor credit history or no credit history was the most frequently cited reason for denial of conventional home-purchase loan applications.
Applicants vary in terms of their likelihood of applying for types of home-loan programs. For example, blacks and Hispanics are more likely to apply for government-sponsored loans (36.0% and 31.7%, respectively) than are Asians, whites, or Native Americans (10.7%, 17.2%, and 18.0%, respectively).
