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Methodology
LendingPatterns , an online HmdA analysis tool developed
by ComplianceTech, was used extensively to mine the HmdA
data to analyze the lending patterns of all HmdA reporting
lenders in the United States by race, income, gender and
geography. The online system produces reports by the
entire United States, metropolitan Statistical Areas (mSA),
states, counties, census tracts and for the 2006 HmdA data,
by Congressional districts of the 110th Congress. Using
LendingPatterns conventional, 1st lien, 1 to 4 family, owneroccupied,
home purchase and refinance loans with a HMDA
reported spread were isolated.
The study describes the overall distribution of the frequency
and magnitude of subprime rate loans for the years 2004
to 2006. Looking back at prior years, the study provides a
recent historical perspective on the distribution of subprime
rate loans. The remainder of the study focuses only on loans
originated in 2006. The 2006 loans are analyzed by race and
ethnicity, income of borrowers, gender, census tract income,
and census tract percent minority.
Race and ethnicity is limited to White, Black, Hispanic,
Asian, Native American and Hawaiian. multi-race, unknown
and Not Available (NA) race categories are excluded.
Income of borrowers and census tracts are characterized
by the Community Reinvestment Act (CRA) 17 classifications
of low, moderate, middle and upper income. These income
classifications are calculated using borrower and census
tract income relative to the median income of metropolitan
Statistical Areas (mSA).
Gender distribution is based on whether the primary
applicant’s gender is male or female or, male or female
without a co-applicant. It is not known whether borrowers
without co-applicants are in fact single. HmdA data only
show that no co-applicant was on the loan application.
Same gender, unknown and NA are included in the gender
analysis.
17 The Community Reinvestment Act is intended to encourage depository
institutions to help meet the credit needs of the communities in which they
operate, including low- and moderate-income neighborhoods, consistent
with safe and sound banking operations. It was enacted by the Congress
in 1977 (12 U.S.C. 2901) and is implemented by Regulations 12 CFR
parts 25, 228, 345 and 563e
The loan amount categories are conforming and jumbo.
Conforming loans are those that conform to the loan
purchase limits of Fannie mae and Freddie mac (less than
or equal to $417,000 in 2006). Jumbo loans are those with
a loan amount exceeding $417,000. Although jumbo loans
demand a higher price, they are not analyzed separately
because the focus of this study is on the 1st lien loans that
exceed the three percentage point threshold for HmdA
spread reporting.
Finally, the census tract percent minority analysis uses 2000
Census data to stratify census tracts by their percent of
minority inhabitants. All subprime rate loans are distributed
cross census tracts in 10 percent increments, i.e. a range
from 0% to 100% minority.
Page 6 of 27 The Demographic Impact of the
Subprime Mortgage Meltdown