And It’s Non-Bank Lenders By a Nose

with-great-power-comes-great-responsibility-non-bank-lenders-number oneIt’s official (as if we didn’t know), according to the 2016 HMDA data, non-bank lenders made more mortgage loans than their bank counterparts.

For the first time since way back in 1995, the non-depository lending institutions closed more purchase and refinance mortgage loans. You’ve come a long way, baby.

Some interesting facts realized from the 2016 HMDA information are:

  • 53% of all purchase mortgages were done by non-bank lenders
  • 52% of the refi’s were done by non-banks
  • Total loans increased 13% over 2015; 8.4 million vs. 7.4 million in 2015
  • Purchase loans increased by 10% to 4 million
  • Refi’s increased 16% to 3.8 million.

That’s a whole bunch of loans, to a whole lotta homebuyers and homeowners. It took over 21 years, but non-bank lenders have taken a slight lead in originating. Nice work.

One area to keep an eye on is loan denials. In 2016, loan denial rates for conventional loans were:

  • 22% – black applicants
  • 15% – Hispanics
  • 11% – Asian
  • 17% – all other minority groups, and
  •  8% – whites.

 

As you can see, there is still quite a bit of disparity. Lenders need to pay very close attention as this may be something the CFPB will review and monitor carefully, especially with the new data being collected in 2018.

In addition to the regular monthly pre and post close reviews, lenders need to also carefully review their loan denials to ensure that all I’s are dotted and T’s crossed when handling and declining their applicants.

 

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Loan denials and overall HMDA data should be monitored regularly to ensure all consumers are being treated fairly.

This information may identify trends in denial rates by applicant type, area, loan type, branch, originator, and underwriter. These are trends that must not be overlooked. Identifying indications that something could be amiss in your operation that needs to be addressed and corrected immediately.

Better for you to identify and correct problems before the CFPB. I can guarantee you that their cost for any needed correction will be much higher.

Don’t fear the HMDA. Embrace the process and data collected. It’s great that non-bank lenders have taken the lead in mortgage originations.  But, remember with great power, comes great responsibility.

Use your power wisely. Lend responsibly my friends

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