A new examination of which metropolitan statistical areas benefit the most and the least from government-sponsored enterprises shows that the largest concentrations of GSE-backed mortgages are typically found in regions within Northern states and the smallest in the lower half country, including the Southwest.
Boulder, Colorado, commands the highest share at 67%, according to the Center for Mortgage Access, a recently-formed think tank that analyzed the latest-available Home Mortgage Disclosure Act data. Laredo, Texas, is near the other end of the spectrum at 22%, the data from last year shows. Puerto Rico and other areas have smaller shares than Laredo, but they tend to be less indicative of the broader mainland market due to the presence of
The geographic distinctions point to a potential policy consideration in terms of the GSEs' national and local roles, according to Scott Susin, founder of the center and author of the research brief entitled "Who Benefits from Government Mortgage Guarantees?"
"I think it's important that the GSEs serve the whole country," said Susin, who previously served as a senior economist for the Federal Housing Finance Agency that oversees the enterprises. Susin also previously served as an economist for the Department of Housing and Urban Development.
The averages show the share of GSE-backed lending is high nationally at 45%, but some local leaders might be interested to learn about how their area compares.
"One thing I'm hopeful about is that areas that have low GSE shares will be interested to learn that," Susin said. "They know a lot more about their local problems and issues than me, but they may not know that they're really not being supported by Fannie and Freddie. I hope that this will be news to them and will inspire them to dig further."
Differentiators between the two ends of the range
To get a sense of what factors differentiate the two ends of the range, the study also examines six predictors and how the GSE share compares to four other types of loans in the study, in which Susin validated the HMDA data with information from the FHFA's National Mortgage Database.
National averages for the latter break down as follows: 22% for Federal Housing Administration-insured loans and 18% for portfolio loans. Department of Veterans Affairs-guaranteed mortgages account for another 12% on average and loans made possible by the Rural Housing Service account for the remaining 1%. Since the report focuses on metros, the rural loan share is not statistically significant in some areas such as Laredo or Boulder. Both areas also have a largely negligible or roughly 1% share of loans funded through the private-label securities market.
Previously, the FHFA showed interest in making GSE loans more competitive with FHA. Lower-income borrowers can potentially avoid paying insurance on the latter by getting a loan from Fannie and Freddie. The FHA responded by dropping its upfront premium by 30 basis points,
The study also looked at predictors that included loan amount, income, volume and the percentage of Black and Hispanic households in a region.
Boulder, for example, had a higher average loan amount of $598,000 compared to $364,000 nationally, while Laredo's is lower at $256,000. In a nation where 24% of households are considered low-income, the Black/Hispanic percentage is 30% and the average annual salary is $143,000, comparable figures in Boulder are $221,000, 21% and 15%, respectively. Households in Laredo make $109,000 on average, 11% are considered low income and the Black/Hispanic percentage is 96%.
