Mortgage Market Conditions and Borrower Outcomes: Evidence from the 2012 HMDA Data and Matched HMDA - Credit Record Data

Federal Reserve Bulletin, 2013, Vol. 99 No. 4

58 Pages Posted: 22 Sep 2013 Last revised: 11 Aug 2017

See all articles by Neil Bhutta

Neil Bhutta

Board of Governors of the Federal Reserve System

Glenn B. Canner

Board of Governors of the Federal Reserve System - Division of Research and Statistics

Date Written: September 18, 2013

Abstract

This article describes mortgage lending activity in 2012 based on newly available data reported under the Home Mortgage Disclosure Act (HMDA). In addition, we present the results of a first look at a new data set composed of HMDA records matched to borrowers' credit records. Using the matched data, we compare borrowers’ credit characteristics at loan origination, and subsequent payment performance, by various HMDA attributes such as income, minority status, and type of lender. Also, because the credit record data are longitudinal and follow individuals rather than just their mortgages, we are able to study long-term outcomes of mortgage borrowers beyond performance on their mortgage, such as whether credit scores recover after delinquency at a different pace for different demographic groups. We focus on loans made in 2006, which reflect lending activity at the height of the housing boom, and loans made in 2010, which reflect the subdued market conditions post crisis.

Key findings include: (1) substantive differences in performance across racial and ethnic groups exist even after controlling for credit score, house price appreciation, and higher-priced loan status; (2) credit score recovery after mortgage delinquency, on average, is similar across racial and ethnic groups and takes over four years; and (3) loans originated in 2006 that are the focus of the Community Reinvestment Act (CRA) had a lower delinquency rate than the rate for all loans, inconsistent with the view that the CRA was a principal driver of the mortgage crisis.

Keywords: Mortgage lending, discrimination, subprime, Community Reinvestment Act (CRA), Home Mortgage Disclosure Act (HMDA), Qualified Mortgage

JEL Classification: D12, G21, R00

Suggested Citation

Bhutta, Neil and Canner, Glenn B., Mortgage Market Conditions and Borrower Outcomes: Evidence from the 2012 HMDA Data and Matched HMDA - Credit Record Data (September 18, 2013). Federal Reserve Bulletin, 2013, Vol. 99 No. 4. Available at SSRN: https://ssrn.com/abstract=2328830

Neil Bhutta (Contact Author)

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Glenn B. Canner

Board of Governors of the Federal Reserve System - Division of Research and Statistics ( email )

20th and C Streets, NW
Mailstop 153
Washington, DC 20551
United States

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