FHA Leaders for Texas

CTX Mortgage is Number 1 in FHA market share in Texas through April of this year. They have captured a greater share of the FHA purchase mortgages than their closest competitors. Universal American Mortgage, CH Mortgage, Countrywide Bank and Wells Fargo Mortgage are the closest competitors.

Colonial Bank Gains in Georgia

Colonial Bank of Montgomery, Alabama has increased their FHA mortgage sales in Georgia by over $89 million from the same period last year. Colonial Bank has taken advantage of an increasingly growing FHA market in Georgia this year. Georgia is currently #2 behind only Texas in FHA mortgage activity.

Primary Capital Advisors gains FHA mortgage Share in Georgia

Primary Capital Advisors announced the offering of FHA mortgage products in August last year. From startup with the new FHA product, Primary Capital now ranks 17th in Georgia.

Last year, First Magnus Financial was a leading FHA wholesale lender in Georgia. First Magnus's leading broker/correspondent was Metro Brokers, Financial . In August 2007, First Magnus filed bankruptcy and stopped originating mortgage loans. The data shows that First Magnus's loss was Primary Capital's gain. Primary Capital succeeded in funding the bulk of Metro Brokers Financial's FHA applicants. This business was key in making Primary Capital a rising FHA mortgage star in Georgia.

FHA Leads in Texas. They got that right!

Article in Dallas Morning News confirms that Texas leads the nation with the most FHA mortgage originations.

FHA Mortgage Stats, Ranking the Counties through April 2008

In 2007, Texas had four of the top ten counties originating FHA mortgages. Is this a regional bias? Do the prices of homes in Texas contribute to the number of FHA mortgages in Texas counties? Were down payment assistance providers the reason for this geographic bias of FHA mortgages?

So far in 2008, only two Texas counties are in the FHA top ten and the mortgage lending volume is increasing.

Maricopa County (Phoenix), Arizona leads all counties in the nation in originating FHA mortgages.

Home Prices Holding Up?

There has been much made of the metro areas that have been particularly hard hit during the current housing downturn. However, housing prices in many urban areas within these metros have held up well. Will increasing gas prices and falling home values in the outer suburbs increase demand for homes closer to the urban centers?

What lenders are increasing their sales in Chicago, Boston and San Francisco where home values have held up reasonably well?

Hope Now Offering New Help

Hope Now, the alliance of lenders, mortgage servicers and community advocacy groups offering assistance to homeowners announced new guidelines today. These guidelines should help homeowners get feedback on the status of their applications to avoid foreclosure.

According to the U.S. Department of Housing and Urban Development (HUD) over 1.6 million Americans have received help from Hope Now. Many homeowners have taken advantage of HUD's FHASecure program allowing them to refinance from expensive adjustable rate products to FHA insured loans.

Many lenders have increased their sales in the FHA market in 2008 through FHASecure.

Mortgages in Beverly Hills

Are we supposed to feel better by learning about mortgage default and foreclosures impacting wealthy or famous people living in the most expensive communities?

CNN reports on foreclosures in communities such as Beverly Hills and other multi million dollar communities. Is this a case where the homeowners financed their homes with mortgages from those evil predatory lenders or might the decline in real estate values make it a smart business decision to walk away from mortgage debt?

Look at the lenders who originated the mortgages on Beverly Hills' homes. You normally do not associate them with predatory nor subprime lenders. By the way, I peaked at the rate spread values in 2006 HMDA data for Beverly Hills. 1,233 out of 1,368 mortgages were low cost (rate spreads < 3%).

Exagerating subprime using HMDA rate spreads

Do you believe that the HMDA data's rate spread values define the mortgage as subprime?

You frequently find news articles and web sites that count mortgages containing an interest rate spread value in HMDA data as a subprime mortgage. Often, perhaps most of the time, these rate spread reportable mortgages are subprime mortgages. The goal of the federal regulators was to have rate spreads reported for subprime mortgages and avoid having lenders report rate spreads for prime mortgages in their HMDA data submission. Not all mortgages in the HMDA data base having rate spreads are subprime.

Here is an example where the volume of subprime mortgages is over reported. The authors state "In 2006 alone, subprime lenders refinanced more than 60,000 Ohio mortgages. "

This is going to get a little technical but it is important to be fair!

Since 2004, any mortgage having an annual percentage interest rate exceeding the rate on treasury securities of comparable maturity by a threshold (3% for first lien and 5% for subordinate lien) must report that rate spread in their HMDA data submission. So the OHIO report for 2006 containing all conventional refinance mortgages having a rate spread finds 60,072 mortgages.

While HMDA lacks data items such as credit scores and loan to value ratios wich impact costs of mortgages(hence interest rates and spreeads), they do provide indicators of home occupancy status, manufactured home status, and loan amount. Mortgages typically charge higher rates on non-owner occupied homes or manufactured homes. (They charge more on jumbos but I am leaving that out for now). Most of the news articles and web sites ignore all these attributes when reporting subprime mortgage volume from HMDA data.

An adjusted report for Ohio, excluds non-owner occupied mortgages and manaufactured home mortgages. This results in reporting about 7,500 fewer subprime mortgages from the report in the June 2nd Columbus Dispatch article.

FHA Loans Rising In Silicon Valley

The Mecury News reports that a "nearly extinct" mortgage loan is now reappearing in the Silicon Valley - the FHA loan. For many years, the FHA loan limit was too low for many buyers to use in high-cost real estate areas such as the San Francisco Bay Area. The passage of the economic stimulus package by Congress in February raised the FHA loan limit in the San Francisco Metro Area to $729,750. As a result, it has become an excellent option for many home buyers.

Lenders and brokers are reporting both an increase in applications for purchase loans as well as refinancing from more expensive adjustable rate products.

The number of FHA loans in the San Francisco Metro Area during January through April 2008 has increased to a total of 112 mortgages from a total of just 13 mortgages during the same months in 2007.

H&R Block Sued by Massachusetts

The LA Times reports that Massachusetts filed suit charging H&R Block/Option One Mortgage with "unfair and deceptive conduct". The complaint alleges that Option One targeted minorities with subprime loan products and charged minorities higher points and fees on mortgages than they charged white borrowers.


Does the 2006 HMDA data support those charges? In order to compare apples to apples we looked at conventional first lien purchase and owner occupied refinance mortgages having mortgage amounts under the conforming loan limits ($417,000 for year 2006). Then we looked at HMDA reportable interest rate spreads. For these mortgages the rate spread would be 3% over treasuries with comparable maturities. Rate spreads for first lien mortgages below 3% are not reported in HMDA data. In Massachusetts, Option One originated 3,169 mortgages with reported rate spreads out of 3,329 mortgages (95%). All lenders originated 35,388 reportable rate spread mortgages out of 154,952 ( 23%). It is obvious that Option One has operated in the sub prime mortgage product space.

When we look further at Option One's data, we found that White borrowers represented 2,102 of the total 3,329 (63%) of interest spread reportable mortgages. Minority borrowers represented 427 of 3,329 (13%). The remainder of Option One's borrowers did not disclose race or ethnicity. A mortgagor was classified as minority if the applicant or co-applicant reported ethnicity as Hispanic or race as either Native American, Asian American, African American, or Hawaiian/Pacific Islander. A mortgage was classified as white borrower if the applicant reported not Hispanic for ethnicity and race white and co applicant was reported as white or there was no co-applicant. Of the mortgages originated to minority borrowers, the mean rate spread was 5.96 while the mean rate spread for white borrowers was 5.94.

Looking at the communities where Option One originated HMDA rate spread reportable loans, 2,231 of 3,329 mortgages were in census tracts where the minority population was less than 20%. 346 of 3,329 mortgages were in census tracts having minority populations exceeding 50%. With respect to income of the communities, 910 of Option One's mortgages were in census tracts having median incomes of less than 80% of their metropolitan area income, 462 mortgages were in census tracts having median incomes exceeding 120% of their metropolitan areas income.

The data we do not have includes loan to value ratios for these mortgages nor FICO scores of the applicants. The HMDA data does not report on loan terms such as pre-payment penalties, cash out refinances, or balloon payments. Perhaps the Masssachusetts case has its evidence in that data.

So what are we to conclude from the HMDA data? Looks to me like Option One provides abusively high cost mortgages on an equal opportunity basis.

Return of Mortgage Finance by Local Banks in Slavic Village, Cleveland, Ohio

Two recent articles (CNN and Newsweek) tell the sad truth about predatory lending and its impact on Slavic Village, a community in Cleveland, Ohio. The data reports show the contribution of mortgage loan misery made by Argent, New Century, and other out of town subprime mortgage lenders from 2004 through 2006.

While Slavic Village still suffers, there is some encouraging news. Mortgage lenders continue to lend in Slavic Village. The difference between the period before 2007 and now is the share of lending by local banks in Cleveland. Michael Hirsh's "Mortgages and Madness" article ends with the hope that mortgage finance will return to local lenders. The data shows that local lenders are the leaders in mortgage finance for Slavic Village.

Tell us what you are seeing in your communities. Has mortgage lending returned to the local retail banks ?

Introduction Post

Greetings! This is Howard Tenenbaum writing to you from MortgageDataWeb.com. My goal is to share with you my observations about the mortgage lending industry.

This blog provides commentary on the mortgage industry and residential finance news. Postings on this site often include reports using the data in our mortgage databases to support the comments on mortgage news.

I invite you to share your comments, observations, and data to provide readers of this site a better understanding of what is happening now, and what you expect to happen with mortgage lending.

Wells Fargo Regains Leadership

For years, Wells Fargo Mortgage was the leading lender and it looks like they are regaining the lead over rivals Bank of America and Countrywide, during the challenging times since mid-2007.
Note how Wells is on top for purchase-money mortgages in early 2008 (the last few years this spot has been taken by Countrywide). Looking at a chart for Wells, we can see a modest upturn in early 2008. Have a look at how they have been trending higher in market share in their largest volume market.