American Indians were extended mortgages in less than half their proportion of the population during 2012, federal government numbers show.
Indians received 26,292 mortgages in 2012, the most recent year Home Mortgage Disclosure Act (HMDA) data cover. That was just 40% of their share of the country’s population, according to HMDA data sorted by ComplianceTech, an Arlington, Virginia, fair lending software and HMDA analysis firm. (The 2013 HMDA numbers are not due to be released until this fall by the Federal Financial Institutions Examination Council, a unit of the Federal Reserve and other agencies.)
Only African Americans fared worse than Indians, achieving just a 36% share of their proportion in the populations.
Native Hawaiians did a lot better. Hawaiians and other Pacific Islanders (natives of Guam and American Samoa) got nearly as many mortgages as Indians in 2012, 25,610. But since there are many fewer Native Hawaiians than American Indians, their ratio was 188% of their proportion of the population, a better percentage than any other minority group, according to a report ComplianceTech managing director Maurice Jourdain-Earl presented to a diversity conference last year.
ComplianceTech’s Lending Disparity Profile for 2012 (generated by its HMDA software product LendingPatterns) shows Native Americans (American Indians and Alaska Natives) were denied a total of 28.77% of the time in 2012, second only to blacks, at 32.3%. They suffered loan “fallout,” meaning their loan applications were incomplete or withdrawn, 18.62% of the time. Loans apps actually funded came to 52.61%, again second lowest only to blacks.
Sami Jo Difuntorum, chairwoman of the National American Indian Housing Council, commented that while according to 2012 HDMA statistical data, American Indians experienced a mortgage denial rate of 25.5% for new home purchases, “it is worth noting this number decreased from 26% in 2011. However, the percentage is high compared to most other populations.”
Difuntorum, also executive director of the Siletz (Oregon) Tribal Housing Department, said “Clients often lack credit, good and bad. Many have never used credit cards or financing for purchases such as automobiles, furniture, and clothing. In instances where negative credit exists it can be for many reasons including high poverty rates in some rural areas. Predatory lenders are also a factor that contributes to negative credit scores.”
By the numbers, Native Americans put in 54,709 applications for home loans in 2012. The number funded came to 26,292, there were 14,379 denials, and 9,307 experienced fallout.
Native Hawaiians did better, with 58.15% (25,610) of 49,627 apps funded. Native Hawaiians saw 9,695 denials and 8,379 loans in fallout.
Combining the Native American and Native Hawaiian categories shows more than 100,000 applications for mortgages made in 2012, of which nearly 52,000 were funded. There is no breakout available on how many Natives got mortgages on reservations.
The Federal Reserve itself puts out a report on HMDA results each year, but its usefulness to analysis of Native mortgages is limited because on several tables Native people are included in the “other” category.
The tables that do include Native people show that denials decreased for 2012 from 2011 for both Native Americans and Native Hawaiians in the category of “conventional” mortgages (these include Freddie Mac/Fannie Mae and “jumbo” mortgages). Denials dropped for both home purchase and refinancing categories, as Difuntorum noted.
In the “nonconventional” category (meaning mortgages insured by the Federal Housing Administration and the Department of Veterans Affairs), denials in both Native categories increased for home purchases, but declined in refinancings.
The Fed report showed declines in higher-priced lending for both Native categories. That category means loans with interest rates 1.5% over the average loan percentage. Indians got higher-priced loans in 8.04% of convention loan purchases, a slight decrease from 2011, but the highest of all minorities. (The federal government considers Hispanics an ethnicity rather than a race.) Higher-priced loans are much less frequent for Hawaiians in this category, at 1.74% of loans.
In conventional refinancings, Indians got more higher-priced loans (2.56%) than Hawaiians (.9%) but fewer than blacks (2.86%).
On the nonconventional side, Hawaiians had more higher-priced loans (2.66%) than Indians (2.35%) on home purchases, and fewer than Indians in the refinancings category.