The mortgage and housing market experienced important changes in 2014, including changes in home prices and interest rates, and the enactment of home mortgage regulations. In this dynamic environment, it is important to track how the mortgage market has evolved at the local level for low- and moderate-income (LMI) families and families of color. In this brief, the annual Home Mortgage Disclosure Act (HMDA) data have been used to analyze mortgage market trends during 2014 in the New England states. The number of mortgage loans declined sharply in 2014, primarily driven by a decrease in refinance loans. Home purchase loans remained flat from 2013 through 2014. Nonconventional loans (FHA, VA, FSA/RHS) continued to play an important role, especially among low-income and nonwhite borrowers. Close to 40 percent of home purchase loans to LMI individuals were government-backed loans, and nearly half of all home purchase loans issued to blacks and Latinos were FHA mortgages. Home purchase denial rates have been declining for Latinos since 2012 and for blacks since 2013. Despite this downward trend, blacks and Latinos continued to have much higher denial rates than whites. HMDA data does not include applicants’ debt-to-income ratios, credit scores, or loan-to-value ratios, but annual income is stated. When we used income to compare denial rates by race for all loan types, we found that the denial rate for Latinos earning $71,000 to $90,000 and blacks earning $121,000 to $150,000 was almost equivalent to the denial rates for whites earning $31,000 to $50,000.
From Community Development Issue Brief No. 2, 2016 by Jennifer Haynes and Amy Higgins