HMDA: Credit Unions Lend to Lower-Income Americans
Take a deep dive into how CU lenders stacked up against banks and other lenders in 2021 and the first half of 2022.
Data from the NCUA and Mortgage Bankers Association showed how that momentum slowed in the second quarter, and some of the largest credit union lenders are expecting originations to fall in the second half of this year.
Detailed data from the Home Mortgage Disclosure Act showed credit unions that depended the most on refinances last year tended to have much larger drops in overall first-mortgage originations in the first half of 2022.
CU Times analyzed the HMDA data on 303,477 loans worth a combined $90.8 billion from 25 large credit union mortgage producers. This group, the CU 25 for short, accounted for about a third of credit union production, but only 2% of the U.S. total. They were picked based on their residential loan originations in 2021 from NCUA data.
The comparison group, or Mega 10, were the 10 largest first mortgage producers in HMDA data, all banks and other for-profits that originated 3.8 million first-mortgage loans worth $1.27 trillion, or 27% of the U.S. total by number and value.
Those datasets were trimmed further to narrow to loans that were residential. They could be first or second residences. They were single-family (1-4 units) site-built or manufactured. They were primarily for a non-commercial purpose.
As other data has shown, credit unions tend to make smaller loans to borrowers with lower incomes than banks. HMDA data for residential first-mortgages for purchases showed the average loan rose 14% to $357,265 among the CU 25 and rose 11.5% to $406,886 among the Mega 10. The average purchaser income was $121,097, up 6.1%, among the CU 25, and $137,882, up 2.5% among the Mega 10.
However, the Mega 10 and CU 25 differed little on two key lending standards. Purchasers’ loan-to-income ratios were 3.0, up from 2.8 in 2020, both among the CU 25 and the Mega 10. CU 25 loan-to-values fell from 83.8% in 2020 to 81.9% in 2021, while Mega 10 LTVs fell from 80.2% in 2020 to 79.6% in 2021.
And the CU 25 and Mega 10 originated residential first-mortgage loans to minorities at about the same rate in 2021. Minority loans were those where either the applicant or co-applicant was identified as Black, Hispanic or another minority.
The CU 25 originated 26.9% of its loans to minorities in 2021, up from 24.8% in 2020. The Mega 10’s minority lending rate was 27.1% in 2021, up from 25.9% in 2020. Here are some other highlights from the HMDA data:
Overall Growth
Growth was slower among the big credit unions than among the top overall lenders. The amount of loans originated in 2021 was $90.2 billion, +11%. Particularly large gains were made by PenFed, where they doubled, SECU of North Carolina (+45%) and Alaska USA, where they rose 23 fold. However, originations fell for 10 of the credit unions. The biggest drops occurred at Mountain America (-16%) and Elevations (-17%).
Originations by the Mega 10 mortgage producers grew 15% to $1.27 trillion in 2021. The biggest gains were at LoanDepot.com ($127.7 billion, +34%) and Home Point Financial Corp. ($67.9 billion, +76%).
Regional Patterns
The CU 25 originated $90.2 billion in first mortgages in 2021, up 11% from 2020. They showed strong gains of around 20% from 2020 to 2021 in the Northeast and South, while loans rose just 8% in the West and fell 2% in the Midwest.
Purchases Vs. Refis
The CU 25 originated $36.8 billion in residential first mortgages for purchases in 2021, up 13% from 2020. Alaska USA rose 38-fold to $759.3 million. The next largest gains were made by Golden 1 (+43%), PenFed (+41%), Randolph-Brooks (+41%) and Security Service (+31%). Purchase originations fell at SchoolsFirst (-15%), America First (-6.3%) and Alliant (-3.7%).
One of the biggest factors in mortgage trends over the past three years has been the refi boom and this year’s bust. The NCUA provides no data to separate refinances from purchases. The MBA tracks purchases and refinances each month, but provides no breakdown by lender type. HMDA does both.
First of all, HMDA data showed the Mega 10 were significantly more dependent on refinances than the CU 25. Refinances at the CU 25 were 60% by number and 54% by value in 2021, while at the Mega 10 they were 75% by number and 70% by value.
The CU 25’s originations for refinances, home improvements and all other non-purchase purposes rose 9.7% to $53.4 billion in 2021, while the Mega 10’s refi and other originations rose 7.2% to $889.3 billion.
These numbers included HMDA classifications for home improvements and “other,” which together accounted for about 5% of origination values among the CU 25 and 1% among the Mega 10.
The big jump in refinances was from 2019 to 2020, when rates plummeted to historic lows. Refis grew slightly as a percent of originations by count among both groups in 2021, but decreased by value. The value of originations among the credit unions fell half a percentage point from 56.1% in 2020. Among the Mega 10, they fell 2.3 percentage points from 77.6% in 2020.
And within refis, HMDA data breaks out cash-out refis. HMDA data showed that cash-out refis rose in value even as other refis fell.
For the CU 25, cash-out refis grew from 18.6% of originations in 2020 to 21.1% in 2021. At the Mega 10, cash-out refis grew from 16.5% in 2020 to 23.4% in 2021.
Regular refis at the credit unions fell from 37.5% in 2020 to 34.5% in 2021. At the Mega 10, non-cash-out refis fell from 60% in 2020 to 45.2% in 2021.
Of course, refis collapsed this year as rates rose. The MBA’s July 18 forecast showed first-mortgage originations from all lenders down 36% to $1.37 trillion in the first half, with purchases up 10% to $858 billion and refinances down 63% to $509 billion.
That would suggest lenders that depended more on refinances in 2021 would be seeing the biggest drops in volume this year compared with those more heavily in purchases. And, generally, that was the case for the credit unions.
Among the nine credit unions where purchases accounted for 33% or less of total first-mortgage origination values in 2021, total first-mortgage originations in the first half of this year were $6.7 billion, down 44% from 2021’s first half.
Among Navy Federal and the four other credit unions where purchases accounted for 45% or more total first-mortgage origination values in 2021, total first-mortgage originations in the first half of this year were $16.5 billion, down 23% from 2021’s first half.
Among eight of the credit unions with purchases between 33% and 45% of originations, first-mortgages fell 12% to $111.3 billion.
PenFed was its own case. Its purchases fell from 48% of first-mortgage originations in 2020 to 34% in 2021. However, its total first-mortgage originations rose 30% to $8.7 billion in this year’s first half.
Purchases accounted for a much lower percentage of loans among the Mega 10 – just 38% in 2021. The lowest were Rocket Mortgage (22%) and Freedom Mortgage (8%). The highest rates of purchase mortgages were at Wells Fargo (54%), Caliber Home Loans (58%) and Guaranteed Rate (56%). However, all of the Mega 10 increased purchases in their mix. The biggest gains were at Rocket Mortgage, where they rose from 12% in 2020 to 22% in 2021, and United Wholesale Mortgage, where they rose from 23% in 2020 to 47% in 2021.
25 Largest Credit Union Mortgage Producers
Here are 2021’s largest residential loan producers with their HMDA residential first-mortgage originations for 2020 and 2021, and NCUA data comparing the first half of 2021 with the first half of 2022:
1. Navy Federal, Vienna, Va. ($159.7 billion in assets, 11.8 million members at June 30) originated $24.6 billion in residential first-mortgages in 2021, up 5.3%, while purchases were flat at $11.8 billion. The NCUA showed first-half originations of first mortgages fell 18% to $10.3 billion.
2. PenFed, Tysons, Va. ($36.7 billion, 2.8 million): $8 billion in 2021, up 101%, while purchases rose 41.1% to $2.7 billion. H1 rose 30% to $8.7 billion.
3. SECU, Raleigh, N.C. ($53 billion, 2.7 million): $6.7 billion in 2021, up 45%, while purchases rose 15% to $2.9 billion. H1 rose 72% to $3.9 billion.
4. Lake Michigan CU, Grand Rapids, Mich. ($12.1 billion, 443,726): $5.4 billion in 2021, down 4.1%, while purchases rose 19% to $3.1 billion. H1 fell 35% to $2.1 billion.
5. First Tech FCU, San Jose, Calif. ($15.9 billion, 636,707): $3.7 billion in 2021, up 16%, while purchases rose 25% to $2 billion. H1 fell 28% to $1.5 billion.
6. SchoolsFirst FCU, Santa Ana, Calif. ($28.1 billion, 1.2 million): $3.5 billion in 2021, down 3.9%, while purchases fell 15% to $685 million. H1 fell 34% to $1.2 billion.
7. BECU, Tukwila, Wash. ($29.5 billion, 1.4 million): $3.4 billion in 2021, up 19%, while purchases rose 10% to $999.2 million. H1 fell 27% to $1.2 billion.
8. Idaho Central CU, Chubbuck ($8.9 billion, 520,623): $3.4 billion in 2021, up 14%, while purchases rose 2.4% to $1.5 billion. H1 fell 11% to $1.7 billion.
9. OnPoint Community CU, Portland ($9.4 billion, 485,961): $2.6 billion in 2021, down 1.6%, while purchases rose 21% to $949.1 million. H1 fell 45% to $874.6 million.
10. Mountain America FCU, ($14.7 billion, 1.1 million): $2.4 billion in 2021, down 16%, while purchases rose 1.6% to $659.7 million. H1 fell 2.7% to $1.1 billion.
11. Elevations CU, Boulder, Colo. ($3.3 billion, 175,600): $2.4 billion in 2021, down 17%, while purchases rose 3.8% to $1.1 billion. H1 fell 41% to $794.7 million.
12. Bethpage FCU, Bethpage, N.Y. ($11.8 billion, 442,217): $2.3 billion in 2021, up 15%, while purchases rose 16% to $482.9 million. H1 fell 46% to $798.2 million.
13. Logix FCU, Burbank, Calif. ($9 billion, 230,357): $2.3 billion in 2021, up 13%, while purchases rose 24% to $427.5 million. H1 fell 21% to $965.2 million.
14. Golden 1 CU, Sacramento, Calif. ($18.5 billion, 1.1 million): $2.2 billion in 2021, down 3.5%, while purchases rose 43% to $1.4 billion. H1 rose 2.8% to $1.3 billion.
15. Summit CU, Madison, Wis. ($5 billion, 228,289): $2.2 billion in 2021, up 5.7%, while purchases rose 14% to $600 million. H1 fell 44% to $675.5 million.
16. University of Wisconsin CU, Madison ($5 billion, 318,635): $2.1 billion in 2021, down 10.5%, while purchases rose 5% to $607.1 million. H1 fell 59% to $519.6 million.
17. ENT CU, Colorado Springs, Colo. ($9.1 billion, 473,470): $2 billion in 2021, up 8.6%, while purchases rose 13% to $794 million. H1 fell 24% to $860 million.
18. Evansville Teachers FCU, Evansville, Ind. ($3.2 billion, 271,482): $1.9 billion in 2021, down 12%, while purchases rose 2.2% to $769.7 million. H1 fell 41% to $713.9 million.
19. America First FCU, Riverdale, Utah ($17.5 billion, 1.3 million): $1.7 billion in 2021, up 13%, while purchases fell 6.3% to $300.2 million. H1 fell 54% to $552.6 million.
20. Patelco CU, Dublin, Calif. ($8.8 billion, 445,895): $1.7 billion in 2021, up 9.1%, while purchases rose 21% to $649.7 million. H1 fell 68% to $359.2 million.
21. Security Service FCU, San Antonio ($12.5 billion, 794,156): $1.7 billion in 2021, down 3.9%, while purchases rose 31% to $606.4 million. H1 fell 0% to $860 million.
22. Alaska USA FCU, Anchorage ($11.4 billion, 719,871): $1.6 billion in 2021, up 23-fold from $66.7 million in 2020, while purchases rose 38-fold to $759.3 million. H1 fell 45% to $557.6 million.
23. Randolph-Brooks FCU, San Antonio, Texas ($15.5 billion, 1.1 million): $1.3 billion in 2021, up 6.5%, while purchases rose 41% to $474.9 million. H1 fell 2.5% to $828.8 million.
24. Star One CU, Sunnyvale, Calif. ($10.8 billion, 118,735): $1 billion in 2021, down 10%, while purchases rose 22% to $235.6 million. H1 fell 71% to $556.5 million.
25. Alliant Credit Union, Chicago ($16.4 billion, 694,474): $721.2 million in 2021, down 10%, while purchases fell 3.7% to $192.2 million. H1 fell 65% to $255.3 million.