Texas MH HMDA Analysis 2014

MH Loans and Lack of Federal Insurance or Guarantees

For 2014 there were 315 lenders that originated 10,433 MH loans in the state. That puts MH’s share of total originations in the state at approximately 2.33%. Home purchases accounted for 9,334 of those MH loans, and the nonconventional share of those purchases was 13.27%. Nonconventional loans have FHA insurance or guarantees from the VA, FSA, or RHS. In contrast, nonconventional loans for site-built homes made up 34.64% of purchases.

There is no distinction currently in HMDA data between real and personal property, but I suspect that the bulk of nonconventional originations for MH homes were real property deals.

The 10,433 MH loans total was up 10.37% from the year before, and the 9,334 home purchases reported for the year was up 15.36% over 2013. The remaining 1,099 originations were refis or home improvement loans.

It is also interesting to note the difference between MH and site-built originations in respects to portfolio lending. The vast majority of MH loans, roughly 79.85%, are not sold after origination. In site-built lending only 20.6% are not sold to a secondary purchaser. That is quite a delta and highlights just how much more MH lenders are carrying their own risk for the loans they are originating as compared to site-built lenders.

Affordability and Diversity in MH Home Purchases

The median applicant income for an MH home purchase in 2014 was $48,000 and the median loan amount was $59,000. The MH figures were substantially lower than those for site-built home purchases, whose median applicant income was $89,000 and median loan amount was $178,000.

HMDA tracks the percentage of minorities for the population in the given census tract where the property resides as well as the race and ethnicity of the applicant. We can use these data points to see that while site-built home purchases tend to be in locations with higher percentage minority populations, they have a median minority population percentage of 37.79%, while MH purchases have a median minority population percentage of 33.21%, they do not appear to lead to more diverse home ownership rates. Note that 64.39% of site-built home purchase loans were to non-Hispanic white applicants, while for MH home purchases only 54.03% were.

Looking directly at the Hispanic/Latino demographic, which is the second largest racial/ethnic group in the state at 38.2% of total population, that group makes up 41.55% of MH home purchase loan originations, but only represents 20.09% of site-built home purchase borrowers. This is great news for the industry on a couple of fronts. The first is that the purpose of HMDA disclosure is to ensure to the public that lending institutions are treating applicants fairly, and the data certainly supports that MH lenders are. Secondly, the Hispanic/Latino population growth rate is trending towards that group becoming the majority of Texas residents as early as 2036, so this is a key demographic for continued growth in MH home sales and the industry is currently doing a great job serving that community’s housing needs.

MH’s Strong Rural Presence

We can also use HMDA data to get an idea of home distribution across the state with each property coded with county and metropolitan statistical area (MSA) information. The MSA data is particularly interesting as roughly 89% of the states population lives within one of these counties, or group of counties with a population core of at least 2.5 million. Site-built home purchases follow that distribution and actually lean a little towards MSAs as 94.24% of those home purchases were inside one. MH however, has a very different distribution. Fully 30.63% of MH home purchases were outside of an MSA. It doesn’t get much more rural than that, yet despite this tilt towards providing rural housing, only 3 FSA/RHS-guaranteed home purchase loans occurred in the state for 2014. To put that in perspective, that amounts to just 0.05% of all FSA/RHS-guaranteed home purchase loans for the year, despite that program’s rural focus and 14.43% of all home purchases outside of an MSA being MH.

Dodd-Frank’s Impact on LMI Borrowers

This is the first year of available HMDA data since the Ability-to-Repay (ATR) and Qualified Mortgage (QM) Rules of Dodd-Frank went into effect. We can therefore explore the data for evidence on how the new rules impacted MH lending. At the national level, the Federal Reserve Board stated in their annual HMDA article that “if the new rules discouraged lending to riskier borrowers, they could have led to a significant reduction in the share of loans to minority and LMI borrowers, who tend to have lower assets and credit scores and higher DTI ratios.” They go on to refute an adverse impact citing that “black and Hispanic borrowers’ share of home-purchase loans increased in 2014 after having declined for several years.” They do not however factor in the overall decline in low or moderate income (LMI) borrower originations from 2013 to 2014.

LMI borrowers are those applicants with an income that is less than 80% of estimated current area median family income (AMFI), and if you recall that the median income for an MH home purchase loan borrower in Texas for 2014 was $48,000, and that the median household income for the state is $51,900, an adverse impact on LMI originations would have a proportionally greater impact on MH lending than it would on site-built. We can potentially see this impact directly in the data as MH home purchases for LMI borrowers declined -7.16% from 2013. So while it may at a quick glance appear by the aggregate numbers that since overall MH home purchases increased from 2013 to 2014 that Dodd-Frank did not adversely impact MH lenders, there is evidence that something like 669 additional home purchases would have occurred in the state under the prior year’s regulatory environment.

Explore the Data

If you are a TMHA member and are interested in addiitonal details, we’ve built out the following reports and will update these annually with each HMDA release:

• MH Purchase Totals per County
• MH Purchase Totals per MSA
• MH Originations per Lender