Lead Story

HMDA Data Show Minority Share of Mortgages Plummeting

By Mark Fogarty

Home Mortgage Disclosure Act figures for 2008 show that minorities were big losers in the market contraction last year. And with the current tightening in credit standards showing no signs of easing, prospects for minority lending aren't much better for this year or next.

Lenders made $342 billion in mortgages to minorities last year, out of a total of some $2.1 trillion. That's just 17% of the total, down from 20% in 2007 and 22.6% in 2006.

With the U.S. having a minority population of 33% in the 2000 Census, much of the progress made toward serving the underserved market in recent years seems to have unraveled.

The vaporizing of the subprime mortgage market, which targeted minorities (for better or for worse) is a major factor in the downturn. The merger of Countrywide Home Loans, Calabasas, Calif., and Bank of America, Charlotte, N.C., last year may have had some impact as well, as Countrywide lost its spot as top lender to minorities last year after many years of holding the lead position.

According to the HMDA numbers, lenders made $130 billion in mortgages to Hispanics last year, $100 billion to Asian Americans, $96 billion to African Americans, $9 billion to Native Hawaiians, and $8.6 billion to Native Americans last year. They made $1.32 trillion in mortgages to whites last year, with the rest not stating their race or ethnicity.

In dollar terms, mortgages to minorities decreased by 45%, from $614 billion in 2007 to $340 billion last year.

Lending to Hispanics fell by more than half, from $266 billion to $130 billion. African Americans also registered a sharp drop in mortgages last year, from $170 billion in 2007 to $96 billion, a more than 40% drop in dollar terms. Asian mortgage loans dropped to $95 billion from $145 billion in 2007, or approximately a third.

And though not a huge drop in dollar terms, mortgages to Native people (American Indians, Alaska Natives, Native Hawaiians and Pacific Islanders) have fallen by two thirds over the past two years.

The paucity of lending to American Indians is dramatized by the fact that they were outstripped by loans to Native Hawaiians, a considerably smaller group.

Countrywide last year lost its longtime position as top lender to minorities, although a pro forma merger with Bank of America's totals would restore the merged firm to the top spot.

But JPMorgan Chase, New York, took over the top spot last year, with about $53 billion. Countrywide had $43.4 billion, with Wells Fargo Bank, San Francisco, coming in third at $41.7 billion. (Wells has multiple reporting units for HMDA; this number combines its bank and finance company lending.) Bank of America had $18 billion in minority lending last year, so with Countrywide added in the combined total would be more than $60 billion.

Citimortgage, New York, trailed the other three dominant mortgage lenders in minority volume, at $10 billion. (Citi also has multiple reporting units, meaning the total for the holding company would be higher.)

Countrywide was the biggest lender to African Americans last year, at $13.5 billion, and Native people as well: $1.2 billion to Indians and Alaska Natives, and $1.2 billion to Native Hawaiians and Pacific Islanders.

Chase led the other two categories, with $15.5 billion in mortgages to Asian Americans and $20 billion to Hispanics (the government classifies Hispanics as an "ethnicity" rather than a race).

In 2007, according to HMDA, lenders made $1.87 trillion in mortgages to whites, $266 billion to Hispanics, $170 billion to African Americans, $145 billion to Asian Americans, $16 billion to Native Hawaiians, and $15.5 billion to American Indians and Alaska Natives. Countrywide and Wells were the top two lenders.

HMDA data is notoriously funky. It often overstates the amount of mortgages made nationwide due to errors or double reporting. Also, a large number of people just leave the line for race or ethnicity blank. This year the unidentified came to more than $500 billion in mortgages, fully a quarter of the whole total. That means the dollar volume of mortgages to minorities must have been higher, though not necessarily the percentages.

More than 8,300 lenders reported their mortgage data last year to the Federal Financial Institutions Examinations Council, a unit of the Federal Reserve Bank and other federal agencies.