CFPB Finds "Significant Downturn" in Mortgage Lending Activities in 2022

The CFPB identified trends in the 2022 mortgage market, finding a "significant downturn" in mortgage-lending activities with the exception of lending in open-end lines of credit.

In an analysis based on 2022 residential mortgage lending data collected under the Home Mortgage Disclosure Act in 2022, the CFPB reported:

• an overall drop in the number of applications and originations, (39 percent and 44 percent decreases, respectively);
• a decline in home purchases and an even sharper decline in refinance volume;
• Hispanic white and Black borrowers experienced higher increases in the total loan costs in comparison to Asian and Non-Hispanic white borrowers from 2021 to 2022;
• Black and Hispanic white borrowers continued to have lower median credit scores accompanied by higher denial rates while also paying higher median interest rates as compared to non-Hispanic white and Asian borrowers; and
• debt-to-income ratios rose significantly (over 2021) and were more frequently cited as the reason for loan denial across all racial/ethnic groups.

Statement

CFPB Director Rohit Chopra emphasized that the "significant changes in the rate environment" have a "considerable" impact on the mortgage market. He anticipated that the trends would continue in 2023. He also pointed to the disparities in outcomes faced by Black and Hispanic borrowers, stating that they are "faring worse" when it comes to loan approvals, sizes and fees.

In response to the market trends findings, Mr. Chopra said that the CFPB will shift its attention to ensuring that "borrowers can sufficiently navigate alternatives to foreclosure." He said that the CFPB will examine potential amendments to mortgage servicing standards.