Mortgage Lending to Indians Up in 2015, Still Below National Average

Mark Fogarty

American Indians received $1 billion more in mortgage money in 2015 than they did in 2014, according to data lenders are required to report to the federal government.

The 20 percent jump came in a year that saw overall U.S. lending move to $1.85 trillion from $1.4 trillion in 2014—a 32 percent increase.

In dollars, $6 billion was extended last year to those who designated themselves Native American, up from $4.9 billion in 2014. This includes people who designated their race as Native American (which includes Alaska Natives) and their ethnicity as Hispanic. Some 25 percent of Indians who received loans last year designated themselves as Hispanic.

About 32,000 mortgages were made to Natives last year, with 8,000 of them going to Indians who claimed Hispanic ethnicity. (The federal government considers Hispanic to be an ethnicity, while it considers Native Americans and Native Hawaiians to be races.)

Loan amounts received were considerably less than the national average. First lien loans to Natives averaged $201,000, and second liens $42,000. The national averages were $261,000 for first liens and $65,000 for second mortgages and home equity loans. Native mortgage lending was overwhelmingly for first liens last year, at more than 99 percent of volume.

Lending skewed heavily to upper income Natives, with more than 51 percent ($3.2 billion) coming from those at the upper levels of area median income. Low-moderate income lending made up just 16 percent of mortgage dollars granted, while middle income accounted for 23 percent.

Lenders charged Indians more on interest rates for first mortgages than the national average. Spreads (the difference between what a lender collects on a mortgage and what it pays for the money it uses to make loans) were higher for them than the national average, at 3.17 percent for first liens versus 2.44 percent nationally.

Loan purpose roughly matched the national average, as 53 percent of dollars went for purchase mortgages (to buy a new or existing home) and 45 percent to refinancings. The balance was for home improvement loans.

Women made up 27 percent of Indian borrowers, with ten percent having women as the primary applicant and 17 percent with women with no co-applicant. They were granted $1.6 billion in mortgage finance last year.

Manufactured housing made up just a small percentage of mortgage lending last year, at less than two percent ($119 million). However, not all manufactured housing finance counts as mortgage lending so the total Indian percentage would be higher than that. One-to-four family homes dominated sales, at 98 percent. Well under one percent of dollars went to multifamily mortgages.

Lenders held 22 percent of Indian mortgage dollars granted last year in their portfolios, meaning they kept those on their own books instead of selling them. The 78 percent sold in the secondary mortgage market gave those lenders additional money they could use to make more mortgages.

Of the various secondary market outlets, non-agency investors led with 25 percent of volume. Ginnie Mae led the federal agencies with 24 percent, followed by Fannie Mae with 18 percent and Freddie Mac with 11 percent.

The data come from Home Mortgage Disclosure Act reports filed by some 7,000 lenders with the Federal Financial Institutions Examinations Council, an agency of the Federal Reserve and other federal agencies. The data were analyzed by ComplianceTech, a fair lending and technology firm based in McLean, Virginia, which operates a HMDA database called LendingPatterns.

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