A new report released today by the Federal Financial Institutions Examination Council found that mortgage lending slumped in 2007 as high-risk programs were phased out, Reuters reported.
The group, which includes a number of agencies such as the FDIC, OCC, and OTS, utilized HMDA data from 8,610 financial institutions to analyze home lending statistics and promote fair lending.
Per the report, mortgage applications fell 22 percent from 2006 to 21.4 million, while loan originations slid 25 percent to 10.4 million.
Mortgages extended to minorities fell disproportionately, with home purchase loans to Hispanics down 49 percent and African-Americans down 35 percent.
Conversely, home purchase loans to white borrowers fell just 22 percent, and even less so to Asian borrowers.
Mortgage lenders also greatly reduced the volume of undocumented income loans extended to borrowers, with 69 percent fewer issued in 2007 compared to the year prior.
Piggyback loans fell out of fashion as well, with lenders reporting just 600,000 used to purchase a home in 2007, down 58 percent from the 1.43 million utilized a year earlier.
While it’s clearly troubling that certain racial groups saw lending volume decline disproportionately, tighter lending guidelines and larger down payment requirements should improve conditions going forward.
Meaningful changes, not lower rates, are the answer if we want to break out of this cycle.
(photo: psd)
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