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The Top Reasons Mortgage Loans Are Denied
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Although interest rates have inched up recently, they remain at historic lows, spurring demand in both home purchases and mortgage refinancing. However, many lenders have tightened up their borrowing standards due to the economic uncertainty of the pandemic, and hopeful loan applicants may find it hard to get approved. According to loan-level mortgage data from the
Home Mortgage Disclosure Act, the denial rate for conventional, single-family loans was 18.8% (excluding withdrawn and incomplete applications) in 2019.
Mortgage application denial rates vary by purpose of the loan. When considering total loan applications for conventional, single-family loans, 2,055,774 applications were denied. At 43%, denial rates were highest for home improvement loans. Loans for home purchases had the lowest denial rate, at just 10%. Refinancing applications, both with and withou
Yes, the Mortgage Industry Is As Discriminatory As We Thought
Apr 20, 2021
For decades, critics of the home mortgage industry argued its lending practices have routinely discriminated against people of color. Defenders of the sector counter that such assumptions aren’t necessarily the case blaming disparities on factors like lower incomes or poorer credit scores, fairly typical reasons for someone to be denied a home loan.
Not so fast, say researchers at Morgan Stanley.
A team of four Morgan Stanley professionals poured over Home Mortgage Disclosure Act data from 2010 to 2019. They found that Black home loan applicants with a minimum income of $150,000 were more than twice as likely to be denied mortgages as white applicants. The denial rate for Latino borrowers was also high when compared to that of whites. Further, the percentage of Black and Latino borrowers denied a home equity loan was also much higher than that for whites.
A compliance officer’s tidy tips for growth in a messy regulatory environment
For credit unions of any size, navigating an increasingly complex regulatory environment takes time, attention and resources. The investment gets even bigger and more expensive when compliance issues arise. In fact, according to a CUNA-commissioned study by Cornerstone Advisors, the combined effect of increased costs and reduced revenue due to regulation amount to at least $6.1 billion in financial impact to credit unions.
As chief compliance officer for a banking technology provider and former credit union compliance and risk executive, I have firsthand experience with the messy and costly business of regulatory compliance. I also clearly see the innovation mandate for growth even survival as credit unions face a tightening competitive squeeze from nimble digital challengers, deep-pocketed big money centers and other well-funded banking alternatives. The divide between innovating for growth and contro
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The Consumer Financial Protection Bureau (CFPB) has been busy over the last few months laying out what appears to be a broad regulatory agenda. As discussed in this blog, the Bureau has issued an industry notice emphasizing industry preparedness related to COVID-19 forbearance plans, issued proposed COVID-19-related amendments to the Mortgage Servicing Rules, suggested that it will soon issue an NPRM related to Dodd-Frank 1071, and has proposed a delay to the implementation of its Debt Collection Rules, among other things. As light begins to emerge at the end of the COVID-19 tunnel, the CFPB and other relevant agencies have restarted the HMDA-reporting clock.