Chat
Chat with Sales Hours: Monday-Friday 8:30 a.m. - 4:30 p.m. (CST)
Contact Sales
Call Sales Toll-Free 1-(866) 774-3282 Hours: Monday-Friday 7 a.m. - 5 p.m. (CST)
Product Login
Product Log-in
Product Support
Product Support
Email Sales
Contact Sales
After Hours
  • Support
  • Sign In Sign In
  • AUS NZ UK
CoreLogic - Home
  • Solutions
    view solutions by:

    Data Solutions

    • Lead Generation
    • Property Data
    • Location Intelligence

    Real Estate

    • Multiple Listing Enterprise
    • Agent & Broker

    Mortgage

    • Origination
    • Servicing
    • Appraisal
    • Commercial Property Tax

    Insurance

    • Hazard Risk
    • Catastrophe Risk Management
    • Risk Evaluation
    • Underwriting Automation
    • Weather
    • Claims Automation
    • Restoration
    • INTRCONNECT

    Mortgage Lenders

    • Origination

    Mortgage Servicers

    • Residential Property Tax
    • Default & Loss Mitigation
    • Portfolio Insight & Monitoring

    Mortgage Appraisers

    • Appraisal

    Real Estate Agents & Brokers

    • Agents & Brokers

    Real Estate MLS

    • Multiple Listing Enterprises

    Commercial Real Estate Owners

    • Commercial Property Tax

    Marketing Departments

    • Property Data

    Insurance Underwriters

    • Risk Evaluation
    • Underwriting Automation
    • Hazard Risk
    • Catastrophe Risk Management

    Insurance Risk Managers

    • Risk Evaluation
    • Hazard Risk
    • Catastrophe Risk Management

    Insurance Claims

    • Claims Automation
    • Restoration Contractors
    • Weather Verification

    Construction Contractors

    • Restoration Contractors

    General

    • Location Intelligence
    • Lead Generation
    • Data Solutions
  • Resources

    Reports

    • Climate Change
    • Construction Cost Update
    • Construction Insights
    • Home Price Insights
    • Homeowner Equity Insights
    • Loan Performance Insight
    • Mortgage Fraud
    • Property Tax Delinquency
    • Single-Family Rent Index

    Insight Blogs

    • Hazard HQ
    • Office of Chief Economist
    • Affordable Housing
    • Homebuying
    • Insurance
    • Other Articles

    More Resources

    • Events
    • Case Studies
    • White Papers
    • Podcasts
    • Quick Takes
  • Company
    • About
    • Leadership
    • Newsroom
    • Contact
    • Careers
  • Search
CoreLogic - Home
  • Solutions
  • Resources
  • Company

    • About
    • Leadership
    • Newsroom
    • Contact
    • Careers
  • Accounts

    • Products Sign-in
  • Contact

    • Sales Contact
    • Product Support
  • Regions

    • Australia
    • New Zealand
    • United Kingdom
  • Social

    • Facebook
    • Instagram
    • Linkedin
    • Twitter
    • Youtube
Solutions
VIEW BY:
  • Data Solutions

    • Lead Generation
    • Property Data
    • Location Intelligence
  • Real Estate

    • Multiple Listing Enterprise
    • Agent & Broker
  • Mortgage

    • Origination
    • Servicing
    • Appraisal
    • Commercial Property Tax
  • Insurance

    • Hazard Risk
    • Catastrophe Risk Management
    • Risk Evaluation
    • Underwriting Automation
    • Weather
    • Claims Automation
    • Restoration
    • INTRCONNECT
  • Mortgage Lenders

    • Origination
  • Mortgage Servicers

    • Residential Property Tax
    • Default & Loss Mitigation
    • Portfolio Insight & Monitoring
  • Mortgage Appraisers

    • Appraisal
  • Real Estate Agents & Brokers

    • Agents & Brokers
  • Real Estate MLS

    • Multiple Listing Enterprises
  • Commercial Real Estate Owners

    • Commercial Property Tax
  • Marketing Departments

    • Property Data
  • Insurance Underwriters

    • Risk Evaluation
    • Underwriting Automation
    • Hazard Risk
    • Catastrophe Risk Management
  • Insurance Risk Managers

    • Risk Evaluation
    • Hazard Risk
    • Catastrophe Risk Management
  • Insurance Claims

    • Claims Automation
    • Restoration Contractors
    • Weather Verification
  • Construction Contractors

    • Restoration Contractors
  • General

    • Location Intelligence
    • Lead Generation
    • Data Solutions
Resources
  • Reports

    • Climate Change
    • Construction Cost Update
    • Construction Insights
    • Home Price Insights
    • Homeowner Equity Insights
    • Loan Performance Insight
    • Mortgage Fraud
    • Property Tax Delinquency
    • Single-Family Rent Index
  • Insight Blogs

    • Hazard HQ
    • Office of Chief Economist
    • Affordable Housing
    • Homebuying
    • Insurance
    • Other Articles
  • More Resources

    • Events
    • Case Studies
    • White Papers
    • Podcasts
    • Quick Takes

Home / Intelligence / Expiration of the CFPB’s Qualified Mortgage “GSE Patch” – Part 3

ABOUT THE AUTHOR
Archana Pradhan
Archana Pradhan
Principal, Economist, Office of the Chief Economist
View Profile
  • July 26, 2019

Expiration of the CFPB’s Qualified Mortgage “GSE Patch” – Part 3

African American, Hispanic or Latino, and low-income borrowers, and borrowers buying properties located in underserved neighborhoods more frequent in the “GSE Patch”

BY ARCHANA PRADHAN HOUSING AFFORDABILITY, MORTGAGE FINANCE


This blog is a continuation of Part 1 and 2 of our blog series – Expiration of the CFPB’s Qualified Mortgage “GSE Patch”. In Part 1 we estimated about 16% or $260 billion of 2018 mortgage loan origination volume was QM-eligible due to the GSE Patch.[1] In Part 2 we reviewed borrowers age, income, employment type and home sales price in the high Debt-to-Income (DTI) group. In this blog we focus on borrower’s race/ethnicity, income category, and borrowers buying properties located in low-income and minority neighborhoods.[2]

Impact on Borrowers Population – By Race/Ethnicity and Income Category

To obtain borrower demographic information on race and ethnicity, we matched CoreLogic loan application data to the most recent Home Mortgage Disclosure Act (HMDA) data.[3] The matched data illustrates that the share of African American and Hispanic/Latino borrowers that applied for a loan in the GSE Patch is higher than the share of non-Hispanic White and Asian borrowers. Similarly, low-income borrowers’ share of GSE Patch loans is higher compared with middle- and upper-income borrowers’ shares. Thus, these applicants who would currently fall in the Patch will only be able to apply for Non-QM loans, absent additional policymaking by the CFPB or modifying their financing choice to fall within the Safe Harbor requirements.

African American and Hispanic or Latino borrowers accounted for the highest share of above 43% DTI loans in 2017 (Figure 1). African American and Hispanic borrowers were approximately 1.6 times more likely to have a DTI over 43% than non-Hispanic white borrowers based on 2017 data.

Similarly, low-income borrowers are more likely to be impacted by the removal of the GSE patch. Low-income borrowers accounted for the highest share of above 43% DTI loans, followed by middle-income (Figure 2). Low-income borrowers were more than twice as likely as the upper-income borrowers to have over 43% DTI.

Impact on Borrowers Population – By Property Location Neighborhood Income level and Minority Population 

We also explored whether homes purchased using a loan that fell in the Patch were more or less likely to be in an underserved area, using the Federal Housing Finance Agency’s (FHFA) Underserved Areas definition. The data shows that the share of GSE Patch loans is higher for borrowers buying a home located in an underserved area. Borrowers buying a home located in a low-income neighborhood accounted for a higher share of above 43% DTI loans than borrowers buying a home located in a middle- or upper-Income neighborhood in 2017 (Figure 3).[4]

Similarly, borrowers buying a home located in a minority neighborhood accounted for a larger share of above 43% DTI loans higher than other neighborhoods in 2017 (Figure 4).[5]

Share of Purchase Mortgage Applications with DTI Ratios over 43% by Minority Composition of Neighborhood, 2017[1] See analysis assumption and caveats, including range of estimates in Part 1.

[2] HMDA data provide race and ethnicity information, which are not in the CoreLogic loan application data. But information on mortgage credit profile characteristics, such as DTI ratio, are not in HMDA data.

[3] The most recent HMDA data is available for 2017. The match was based on loan application year, institution, loan purpose, loan type, loan amount, and census tract. The unique match rate was 50%.

[4] As per the FHFA definition, low-income neighborhood is a tract with median income at or below 80% of applicable area median income (AMI). Middle- and upper-income neighborhood is a tract with median income greater than 80% of applicable AMI.

[5] Minority neighborhood is a tract with a minority population of at least 30% and a median income of less than 100% of the AMI. Other neighborhood is a tract with a minority population of less than 30% or a median income of 100% or more of the AMI.

 © 2019 CoreLogic, Inc. All rights reserved.

  • Category: Blogs, Homebuying, Intelligence
  • Tags: GSE Patch, Mortgage, Qualified Mortgages
ABOUT THE AUTHOR
Archana Pradhan
Archana Pradhan
Principal, Economist, Office of the Chief Economist
View Profile

Related Posts

Header Intelligence Protect storm HHQ hazard
Climate Change

2023 Severe Convective Storm Risk Report

As rising global temperatures continue to contribute to increasingly hazardous wildfire seasons, it is more important than ever for homeowners, insurers, and governments to understand the risk these hazards pose to their communities.

March 31, 2023
Construction worker framing a house
Construction Insight

Quarterly Construction Insights – Q1 2023

CoreLogic tracks construction cost for commercial, residential and agricultural construction of all types of goods (labor and materials) throughout the United States and Canada.

March 30, 2023
Jan23LPIPromo
Blogs

Loan Performance Insights – March 2023

U.S. mortgage delinquency and foreclosure rates continued to hold near record lows in January.

March 30, 2023

About Corelogic

  • Newsroom
  • Leadership
  • Careers
  • Ethics & Compliance

Accounts

  • Products Sign-in

Contact

  • Sales Contact
  • Product Support

Regions

  • CoreLogic Australia
  • CoreLogic New Zealand
  • CoreLogic UK

Follow & Connect

  • Facebook
  • Instagram
  • Linkedin
  • Twitter
  • YouTube
© 2023 CoreLogic. All rights reserved.
  • Legal
  • Privacy Policy
  • CCPA
  • Cookie Preferences
  • Security
  • Sitemap
  • Accessibility
  • Legal
  • Privacy Policy
  • CCPA
  • Cookie Preferences
  • Security
  • Sitemap
  • Accessibility