What you need to know about RM HMDA data



5 Take-aways from the CFPB’s recent HMDA report

The CFPB’s or Consumer Financial Protection Bureau’s most recent release of data from the 2019 Home Mortgage Disclosure Act or HMDA submissions is both enlightening and perplexing. If you’re unfamiliar with the Home Mortgage Disclosure Act it was created in 1975 to gather loan-level data from lending institutions to ensure lenders are serving the housing finance needs of their communities. Late last month the watchdog agency released its updated review including new data points that were captured in HMDA data collected in the calendar year 2019. With reverse mortgages being a niche of the larger mortgage market much of the data is focused on traditional mortgage lending. However, the reported reverse mortgage data provides insight into our market’s demographics, applicant’s financial health, and more. Read More

2 comments

Ronald Redd September 8, 2020 at 7:22 am

THANK YOU. needed information.

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James E. Veale, CPA, MBT September 15, 2020 at 1:35 am

Most of us know that HECM endorsement occurs on average about 3 months after origination (i.e. closing). While HUD reports focus on HECM endorsements, the HMDA Report focuses on HECM and proprietary reverse mortgage originations.

While HUD reports on applications, in fact, they are reporting on Case Number Assignments (CNA). Paraphrasing what Colin Cushman said while working at HUD, FHA knows nothing about applications other than those completed lenders for use in applying for a CNA.

On the other hand the HMDA Report is providing “…information about each mortgage application acted upon….” (Page 3). Under federal rules, a mortgage application does not require an official form but rather the following: “…the submission of six pieces of information: (1) the consumer’s name, (2) the consumer’s income, (3) the consumer’s Social Security number to obtain a credit report (or other unique identifier if the consumer has no Social Security number), (4) the property address, (5) an estimate of the value of the property, and (6) the mortgage loan amount sought.” These “applications” must be acted upon. See

https://www.consumerfinancemonitor.com/2014/08/28/cfpb-answers-faq-on-the-tila-respa-integrated-disclosures-rule/

Yet despite its potential value as to reverse mortgages, there appear to be major errors and questionable combinations of data to reach averages. For example, the HMDA Report shows in Table 5.4.1 on Page 152 that 16,400 out of 34,100 reverse mortgage originations in calendar year 2019 were fixed rate. Unless the term fixed has an unusual definition as used in the HMDA, this amount is greatly overstated. HUD tells us that only 947 HECMs endorsed in the 14 months ended April 30, 2020. Even if all proprietary reverse mortgages were reported as fixed rate, the highest the number of fixed reverse mortgages that were originated during 2019 could have been is less than 4,400. So is this fundamental information being misreported due to lender error or HMDA staff errors?

Then there is the questionable comparison of borrower income from reverse mortgage applications to other mortgages. Most forward mortgage loans are based on borrower income, so forward mortgage originators are motivated to find as much of the borrower’s income as possible. Reverse mortgage originators are generally motivated to find sufficient income for the borrower to be able to pass financial assessment and no more.

The HMDA Report has other interesting facts about reverse mortgage such as 46.1% of reverse mortgage applications ended up being originated. Although I am no authority on the HMDA and although it is time consuming, much about reverse mortgages can be learned from the report if one reads the report with the understanding that there are errors throughout the report and information in most cases is incomplete due to exceptions and exemptions.

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