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New Data Shows Important Market Segments Remain Locked-out of Conventional Mortgages in Slowly Recovering Housing Market

Tuesday, September 30, 2014

The 2013 Home Mortgage Disclosure Act (HMDA) data confirms a persistent lack of access to the conventional mortgage market for African-Americans, Latinos, and middle class families.

It is well documented that people of color and low wealth families received a disproportionate share of foreclosures due to being targets of mortgage loans with risky features that were not well underwritten. Today, these same populations are minimally participating in the mortgage market while it is relatively affordable due to historically low interest rates.

As well, these borrowers are more likely to be served by government-backed loan programs than the private market. While FHA insured mortgages serve an important government purpose of providing access to credit, especially for first time homebuyers, they are costlier than before. Recently, FHA insured mortgages faced premium increases and lender guidelines which raised their cost. Absent market competition from the private market, African-Americans, Latinos, and middle class families end up paying more for these government insured mortgages. Additionally, the persistent failure of the private mortgage market to serve these borrowers is troubling as it projected that nearly half of all first-time homebuyers in 2025 will be households of color.

A CRL policy brief summarizing and analyzing the data offers key findings:

  • African-Americans received 4.8% of all purchase mortgage originations, a slight decrease from their share of 5.1% in 2012 and well below pre-crisis levels when the share averaged around 7%.
  • Latino borrowers received just 7.3% of all purchase mortgage originations down from 7.7% in 2012.
  • Low and moderate income borrowers received fewer home purchase loans in 2013 (742,660) than in 2012 (763,190).
  • Government-backed loan programs composed 70.6% of purchase loans made to African-Americans, 62.8% of loans made to Latinos, and 52.3% of loans made to low or moderate income borrowers; they comprised about one-third of loans made to white homebuyers.

"This enduring trend of underserving key segments of the population is deeply disturbing," said Nikitra Bailey executive vice president of the Center for Responsible Lending. "As the slow housing recovery demonstrates there is a market imperative to ensure that African-Americans, Latinos, and middle class families have access to mortgages in both the public and private sectors of the market. The market cannot fully recover without them."

The CRL brief on the HMDA data can be found here:

For more information or to interview the author of this brief, contact Catherine An at 202-349-878 or