• HOME
  • solutions
    • RECURSION ANALYZERS
    • Mortgage Company Data
    • Recursion DataCloud
    • Customized Solutions
  • BLOG
  • CLIENT LOGIN
    • Recursion Analyzers
  • ABOUT US
    • OVERVIEW
    • OUR TEAM
    • News & Events >
      • Recursion In News
      • Recursion Data Citations
  • CONTACT
RECURSION CO
  • HOME
  • solutions
    • RECURSION ANALYZERS
    • Mortgage Company Data
    • Recursion DataCloud
    • Customized Solutions
  • BLOG
  • CLIENT LOGIN
    • Recursion Analyzers
  • ABOUT US
    • OVERVIEW
    • OUR TEAM
    • News & Events >
      • Recursion In News
      • Recursion Data Citations
  • CONTACT
BLOG

The Underwriting Dynamics Behind the FHA Purchase Market Share

9/2/2021

 
In a recent post[1] we looked at the evolution of the FHA purchase mortgage market share broken down between areas with a high percentage of Low-Moderate Income (LMI) households and those without. While the overall FHA share has generally declined since the onset of the pandemic, its share has held up in areas with a preponderance of LMI households. There are many factors behind these trends, but a natural consideration is underwriting standards.

To examine this factor, we use the Recursion Matched Dataset[2], where we create a large sample of loans with characteristics from both HMDA and the Agency disclosure data. A very high share of mortgages can be matched using our proprietary algorithm over the years 2018-2020. The coverage ratio from the Matched Dataset is provided in a previous post[3].

We proceed by looking at three major underwriting characteristics for LMI and non-LMI areas for FHA and the GSE’s: Credit Score (CS), Loan-to-Value (LTV) and Debt-to-Income (DTI),
Most interesting is Credit Scores:
Picture
Run Underlying Query 1
Run Underlying Query 2
​Somewhat unintuitively, credit scores for FHA purchase loans in LMI areas are above those in areas with a smaller share of low-income borrowers. The slides for LTV and DTI are more on point with LMI loans showing somewhat looser credit standards measured by these characteristics for both FHA and the GSE’s:
Picture
Run Underlying Query 1
Run Underlying Query 2
The relationship for FHA regarding credit scores may be due to careful underwriting on the part of lenders in LMI areas, or to a relative lack of competition from the GSE’s there[4]. FHA’s Mutual Mortgage Insurance Fund capital ratio increased for the third consecutive year in the fiscal year ending September 30, 2020[5], indicating limited fallout on FHA’s financial condition through the first six months of the Covid-19 pandemic.

This exercise in examining changes in the market shares between Government and Enterprise programs using big data tools opens new channels for examining the impact of housing finance policies. There will certainly be more to come.

[1] https://www.recursionco.com/blog/the-fha-share-in-lmi-areas
[2] https://www.recursionco.com/blog/the-matched-data-set
[3] https://www.recursionco.com/blog/appraisal-waivers-and-lmi-areas
[4] In the prior blog we noted that in 2020 the FHA purchase loan share in LMI areas was about 25% by count, about 8% higher than the GSE’s that year.
[5] https://www.hud.gov/sites/dfiles/Housing/documents/FHAFY2020ANNUALMGMNTRPT.pdf

    Archives

    March 2023
    February 2023
    January 2023
    December 2022
    November 2022
    October 2022
    September 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    May 2019
    March 2019
    February 2019

    Tags

    All
    Affordability
    ARM
    Bank\Nonbank
    Borrower Assistant Plan
    Cash Window
    Climate Change
    CMBS
    CMO
    Conforming Loan
    Conventional Loan
    COVID 19
    CPR\CDR\CRR\CCR
    Credit Score\DTI\LTV
    CRT\CAS\STACR
    Delinquency
    Early Buyout
    Early Payment Default
    ESG
    ET Pools
    Fannie Mae
    Fed
    FHA
    FHFA
    Forbearance
    Foreclosure
    Foreign Investor
    Freddie Mac
    Ginnie Mae
    Green Loans
    HECM
    HELOC
    HMDA
    HUD
    LMI
    Manufactured Housing
    Modified Loans
    MSR
    Multifamily
    Occupancy Type\NOO
    Partial Claim
    Payoff
    PIW
    Prepayment
    Purchase Loans
    Recursion In News
    Refi Loans
    Reperforming
    RG Pools
    Rural Housing
    Single Family
    Special Eligibility Program
    TBA Market
    TIC
    TPO
    UMBS
    US Treasury
    VA

RECURSION

SOLUTIONS ​
Recursion Analyzers
​
Mortgage Company Data
Recursion DataCloud
Customized Solutions


ABOUT US  ​
Overview
​Our team
CLIENT LOGIN   ​
Recursion Analyzers

CONTACT

224 West 30th St., Suite 303, New York, NY 10001
Contact Us

Picture
Copyright © 2022 Recursion, Co. All rights reserved.​
  • HOME
  • solutions
    • RECURSION ANALYZERS
    • Mortgage Company Data
    • Recursion DataCloud
    • Customized Solutions
  • BLOG
  • CLIENT LOGIN
    • Recursion Analyzers
  • ABOUT US
    • OVERVIEW
    • OUR TEAM
    • News & Events >
      • Recursion In News
      • Recursion Data Citations
  • CONTACT