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The Wait is Over

CoreLogic Estimates 2014 Mortgage Originations Ahead of HMDA Release

Molly Boesel    |    Mortgage Performance

In mid-September every year, the Home Mortgage Disclosure Act (HMDA)1 data for the prior year of mortgage activity is released. This report contains information for lenders and policy makers, including details on mortgage denial rates, borrower and applicant details, mortgage pricing and the level of mortgage originations. The headline figures from the HMDA data include the amount and number of first-lien mortgage originations.2 These figures are used by the mortgage industry, especially mortgage market forecasters, as a benchmark on mortgage originations. During this nine-month wait for the data, a wide range of estimates for mortgage originations typically become available. CoreLogic recently mined its public records data to estimate mortgage originations, and can offer a prediction of what the 2014 HMDA release will say about number and dollar amount of mortgage originations.

Using public records deed information, CoreLogic is able to determine if there was a mortgage related with a sale and the amount of the mortgage.3 The accompanying chart shows a comparison of the CoreLogic and HMDA purchase money, refinance and total origination dollar volumes from 2006 to 2013, as well as 2014 CoreLogic public record origination volume. Given the close relationship between the CoreLogic data and the HMDA data, we estimate that in 2014 the number of mortgage originations fell by 30 percent from 2013 and the mortgage origination dollar volume was down by 27 percent. On average, the CoreLogic estimate of mortgage origination volume is 1 percent below the HMDA estimate, therefore $1.28 trillion shown in the chart is a minimum level of what we expect the HMDA release to report for 2014. Some lenders are exempt from HMDA reporting, and most analysts estimate that lenders reporting under HMDA cover about 95 percent of the mortgage market; therefore, we estimate that total market originations accounting for under coverage is more likely closer to $1.36 trillion.

The decrease in mortgage originations in 2014 was due to a drop off in refinancing. According to CoreLogic data, refinance origination counts fell by 49 percent and the dollar volume fell by 47 percent. The drop in refinancing was partially offset by an increase in purchase money originations. The number of purchase money originations increased by 5 percent and the dollar volume increased by 7 percent in 2014. Purchase mortgage originations were able to pull out a small increase in 2014 due to a decrease in the cash sales share and strong home price appreciation4.

[1]The Home Mortgage Disclosure Act (HMDA) requires many financial institutions to maintain, report, and publicly disclose information about mortgages. HMDA was originally enacted by Congress in 1975 and is implemented by Regulation C. The Dodd-Frank Act transferred HMDA rulemaking authority from the Federal Reserve Board to the Consumer Financial Protection Bureau (CFPB) on July 21, 2011.
[2] The mortgage origination numbers in this post refer to first-lien originations.
[3] CoreLogic data is available on a monthly basis from January 2000 to May 2015. There are data reporting lags in the public records data, however data revisions decrease significantly after three to four months.
[4] CoreLogic MarketTrends show Cash share down 3 percentage-pts, and CoreLogic HPI shows national HPI up 7.6 percent.

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