The FFIEC has released the 2009 Home Mortgage Disclosure Act data this morning. HMDA data cover most mortgage loan applications. The data is released annually. While consumers can ask for the data from lenders directly as soon as April 1st, the Federal Reserve holds its release of the entire set of loans until the middle of September. The new data covers mortgage loan applications made in 2009.
The data was released at 11:10 AM EST. Users can download software that runs with the data, or they can pull out aggregated reports for different geographic areas.
The HMDA data has been released with loan pricing data since 2005. In that regime, HMDA reported the cost of loans in the relation to current 10-year Treasury notes. For instance, if the 10 year (TNX) yield was 2.86 percent at the time of the loan’s origination, then the loan cost would be reported if the price was at or above 5.86 percent. There was a 300 basis point gap for first lien loans and a 500-basis point gap for second lien loans. If a first lien loan was originated at an APR of 6.02 percent, then the HMDA indicator would report the price at 3.16 – reflecting the price difference between the specific loan and the prevailing yield.
There are only a few slight differences in this year’s data. The pricing data is now more sensitive, and the basis of comparison is the cost of a prime loan as indicated by Freddie Mac’s weekly mortgage market survey (PMMS). For first lien loans, the price gap is 150 basis points, whereas for second lien loans, the gap is 350 basis points.
The new rules eliminate the influence of the yield curve. With a flat yield curve, more loans are scored as “higher-priced,” because most lenders price loans based upon the price of shorter-termed credit. Now, the yield curve is a wash.
It is hard to know if the new rules will trigger more reportable loans. When I saw the new rules last fall, I was certain that it would produce more. However, the cost of debt right now proves otherwise. A loan today would make the pricing threshold at 5.87 percent, as this week’s PMMS for a prime 30-year mortgage is 4.37 percent. By comparison, TNX is 2.74 percent today, meaning that the old regime would have had a reportable threshold that was 13 basis points lower.
This table shows how changes in the relationship between the two baseline indices for comparison (PMMS and TNX) would have altered the threshold point for reporting the interest rate on an originated loan in 2009.
One more thing – the regime changed on October 1st, 2009. Loans made prior to that date are recorded for the prior rules. Loans made from then on follow the new scheme.