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Financial Services Law Insights and Observations

CFPB releases 2022 HMDA data

Federal Issues CFPB Consumer Finance HDMA Dodd-Frank Mortgages

Federal Issues

On September 27, the CFPB released a data point report titled 2022 Mortgage Market Activity and Trends, which analyzes residential mortgage lending activity and trends for 2022. The 2022 HMDA data reflects the fifth year of data that incorporates amendments to HMDA made by Dodd-Frank.

The CFPB noted in its press release accompanying the report that “in 2022, mortgage applications and originations declined markedly from the prior year, while rates, fees, discount points, and other costs increased. Overall affordability declined significantly, with borrowers spending more of their income on mortgage payments and lenders more often denying applications for insufficient income.”  They also noted that “as in years past, independent lenders continued to dominate home mortgage lending, with the exception of home equity lines of credit.”  Specifically, Lenders previously reported a 2.4 percent increase in closed-end site-built single-family originations from 2020 to 2021. In 2022, lenders reported 6.7 million closed-end site-built single-family originations, a 50.9 percent decrease from 13.7 million in 2021. Other highlighted trends in mortgage applications and originations found in the 2021 HMDA data point include, among other things:

  • The total number of applications dropped 38.6 percent, and originations decreased by 44.1 percent;
  • Borrowers’ costs and fees for taking out mortgages rose 22 percent from 2021, and a higher percentage of borrowers paid discount points than any year since this type of data has been collected;
  • Refinances were down by 73.2 percent from 2021, with most refinances being cash-out refinances, which the CFPB noted can increase the risk of foreclosure. The CFPB noted that “in a reversal of recent trends, the median credit score of refinance borrowers declined below the median credit score of purchase borrowers.” Home-equity refinances, however, rose in 2022, with depository institutions dominating the home-equity lines of credit;
  • Black and Hispanic white borrowers, borrowers of low- or moderate-income, and borrowers taking out loans secured with properties in low- or moderate-income neighborhoods accounted for a large share of refinance loans;
  • Due to a rise in mortgage interest rates, average monthly mortgage payments increased by more than 46 percent;
  • Debt to income ratio became more likely to be reported as a denial reason for denied applications across racial/ethnic groups in 2022.

In CFPB Director Rohit Chopra’s statement regarding the results of the 2022 HMDA data, he stated, “The significant changes in the rate environment in 2022 are having considerable impacts on the mortgage market. I expect these trends will continue in 2023 given further increases in average mortgage interest rates.”