Sept. 29: CFPB Updates This Week


CFPB Mortgage Report Finds Jumps in Closing Costs and Denials for Insufficient Income, Growing Proportion of Cash-Out Refinances
The Consumer Financial Protection Bureau (CFPB) released its annual report on residential mortgage lending activity and trends. 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. Most refinances during the reported period were cash-out refinances, and, in a reversal of recent trends, the median credit score of refinance borrowers declined below the median credit score of purchase borrowers. As in years past, independent lenders continued to dominate home mortgage lending, with the exception of home equity lines of credit…


Data Point: 2022 Mortgage Market Activity and Trends
This Data Point article provides an overview of residential mortgage lending in 2022 based on the data collected under the Home Mortgage Disclosure Act (HMDA). HMDA is a data collection, reporting, and disclosure statute enacted in 1975. HMDA data are used to assist in determining whether financial institutions are serving the housing credit needs of their local communities; facilitate public entities’ distribution of funds to local communities to attract private investment; and help identify possible discriminatory lending patterns and enforce antidiscrimination statutes. Institutions covered by HMDA are required to collect and report specified information about each mortgage application acted upon and mortgage purchased. The data include the disposition of each application for mortgage credit; the type, purpose, and characteristics of each home mortgage application or purchased loan; the census-tract designations of the properties; loan pricing information; demographic and other information about loan applicants, such as their race, ethnicity, sex, age, and income; and information about loan sales.


Statement of CFPB Director Rohit Chopra on Mortgage Market Activity and Trends

The Consumer Financial Protection Bureau released its annual analysis of residential mortgage data, which generally covers mortgages originated in 2022 and reported by lenders under the Home Mortgage Disclosure Act.

There are a number of important findings from our analysis:

First, we find that average monthly payments increased nearly 46 percent and exceeded $2,000 per month. This is due almost entirely to the rate environment. This change was also accompanied by a substantial increase in income-based denials.

Second, we found a very large increase in the amount of costs and fees paid by borrowers when taking out a mortgage. We suspect that this is, in part, due to the increase in fees related to discount points, where borrowers purchase a lower interest rate at the time of closing.

Third, overall refinancing activity dropped 73 percent. Importantly, the data revealed that cash-out refinances comprise the majority of all refinancing activity. These loans allow a borrower to draw on their home equity. It is possible that homeowners are finding it difficult to move and are using the proceeds from cash-out refinances for renovations and repairs. However, some may be using these products to pay for higher education or other expenses unrelated to housing. Relatedly, we found an increase in home equity lines of credit.

Fourth, we also found some noteworthy disparities in outcomes, with Black and Hispanic borrowers faring worse when it comes to approvals, loan sizes, and fees. However, some of these disparities shrank or even disappeared for FHA loans…