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Description
I. What's New?
In an ongoing commitment to cast light on lending patterns and lending disparities in Memphis and Shelby County, the Community Development Council of Greater Memphis (CD Council) and the Center for Community Building and Neighborhood Action (CBANA) at the University of Memphis continue to strengthen their annual analysis of Home Mortgage Disclosure Act (HMDA) data. The 2005 Lending Study includes more in-depth analysis of data reported to HMDA, reconfiguration of the data to include more zip code level analysis, and the integration of HMDA data with other housing market data for Memphis and Shelby County. More specifically, the 2005 Lending Study has been expanded to include:
* More comprehensive analysis of housing market indicators and trend data at the zip code level. Data reported by lenders required to report under the Home Mortgage Disclosure Act (HMDA) is included for both 2004 and 2005. (1) Other trend data is extracted from records filed with the Shelby County Register of Deeds, and is reported for 2000-2006. Indicator data provides greater context within which to interpret lending patterns in particular zip codes.
Zip code level data includes:
* Mortgage originations reported to HMDA
* Subprime mortgage originations reported to HMDA
* Mortgage originations recorded with the County Register of Deeds (2)
* Arms-length residential property sales Quit-claim residential property transfers
* Foreclosure notifications
* Substitute trustee deeds
* Expanded analysis of the "dual mortgage market" to include more comparison between lending by local retail depository institutions (banks and credit unions) and "non-local" lenders. Non-local lenders include depository institutions that do not have a local branch bank but may or may not have a local storefront lending operation, and independent or affiliated mortgage companies that may have a local storefront, work through a local broker, or are accessible through the internet. The expanded analysis includes a discussion of the prime lending market share that has been forfeited to non-local lenders by a mortgage lending retrenchment on the part of the "Big Five" local banks. It is also clear that race-related lending disparities are very much associated with the function of the dual market, and are as important to understand in these terms as in terms of approval and denial rates.
* More in-depth analysis of HMDA-supplied "reasons for loan denial" including more information on the characteristics of applicants who have been denied loans. It is important to note that credit scores are still excluded from HMDA reporting, making it difficult to estimate the independent effect of racial bias in the continuing pattern of racially disparate lending in Shelby County. This deficiency could be countered somewhat by geographic-based credit data available for purchase from the three national bureaus; CBANA is negotiating a data partnership that may make this analysis possible for next year. In the meantime, we compare characteristics of applicants denied by both local and non-local institutions.
* As with the 2004 lending study, "center city" and "non-center city" comparisons have been replaced by comparisons among Zones 1 (center city), 2 (mid-city) and 3 (suburban). (See planning districts overlaid by zones in Map 1.)
* Applications and loans to self-identified Hispanics remain too few for meaningful analysis, so that lending disparities continue to be couched in terms of comparisons between white and African-American applicant-borrowers.
II. Key Findings for the 2005 Lending Study
The Executive Summary reports key findings that 1) build on themes from the 2004 study; 2) develop new themes that are resulting for more comprehensive and contextual analysis; or 3) document significant change from 2004. As always, the study is informed by the desire to understand (and counter) racial and ethnic disparities in lending and grapple with changes in mortgage markets that undermine neighborhoods or might be leveraged to produce positive change.
Key Finding 1: High-cost (3) lending continued to expand in Shelby County from 2004 to 2005, prior to the national realignment in the subprime mortgage market in 2006. The number of subprime loans by 59% from 9,511 in 2004 to 15,080 in 2005.
While we may anticipate some changes in 2006 HMDA data-based on the fallout from an overpriced housing market where "risky" lending was encouraged because of anticipated double-digit annual appreciation--it is not at all clear that the Shelby County housing market was or is being driven by the same considerations. While Shelby County may be influenced by the exit of some subprime lenders from the market, the fact that Shelby County housing continues to be "undervalued" (according to national real estate... |
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