National Survey of Mortgage Originations


The Federal Housing Finance Agency has issued a request for comments on the National Survey of Mortgage Originations. The NSMO is

a recurring quarterly survey of individuals who have recently obtained a loan secured by a first mortgage on single-family residential property. The survey questionnaire is sent to a representative sample of approximately 6,000 recent mortgage borrowers each calendar quarter and typically consists of between 90 and 95 multiple choice and short answer questions designed to obtain information about borrowers’ experiences in choosing and in taking out a mortgage.

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The NSMO is one component of a larger project, known as the “National Mortgage Database” (NMDB) Project, which is a multi-year joint effort of FHFA and the Consumer Financial Protection Bureau (CFPB) (although the NSMO is sponsored only by FHFA). The NMDB Project was created, in part, to satisfy the Congressionally-mandated requirements of section 1324(c) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, as amended by the Housing and Economic Recovery Act of 2008 (Safety and Soundness Act). Section 1324(c) requires that FHFA conduct a monthly survey to collect data on the characteristics of individual prime and subprime mortgages, and on the borrowers and properties associated with those mortgages, in order to enable it to prepare a detailed annual report on the mortgage market activities of the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) for review by the appropriate Congressional oversight committees. Section 1324(c) also authorizes and requires FHFA to compile a database of timely and otherwise unavailable residential mortgage market information to be made available to the public. (81 F.R. 62889)

Obviously, this is another post on a technical subject that is not for the faint of heart, but it is very important for the health of the mortgage market. During the Subprime Boom of the early 2000s, mortgage characteristics changed so quickly that information became outdated within months.  Policymakers and academics did not have good access to newest data and thus were operating, to a large extent, in the dark.

The information in the NSMO will not only help regulators, but will also outside researchers to “more effectively monitor emerging trends in the mortgage origination process . . ..” (81 F.R. 62890) The FHFA requests comments on whether “the collection of information is necessary for the proper performance of FHFA functions, including whether the information has practical utility.” (Id.) The FHFA is also looking for comments on ways “to enhance the quality, utility, and clarity of the information collected.” (Id.) Those with an interest in securing a safe future for our mortgage markets should take a look at the survey instrument (attached to the Comment Request) and respond to the FHFA’s request. Comments are due on or before November 14, 2016.

Wednesday’s Academic Roundup

CFPB Issues Fair Lending Report That Highlights Data Collection

The Fair Lending Report of the Consumer Financial Protection Bureau provides an overview of the Bureau’s actions over the last year.  Some of the most interesting elements of the report relate to future HMDA and TILA rulemaking:

Section 1094 of the Dodd-Frank Act amends HMDA to require the collection and submission of additional data fields related to mortgage loans, including certain applicant, loan, and property characteristics, as well as “such other information as the Bureau may require.” The CFPB is examining what changes it may propose to Regulation C. . . .

Finally, section 1403 of the Dodd-Frank Act requires that the CFPB prescribe regulations under TILA to prohibit “abusive or unfair lending practices that promote disparities among consumers of equal credit worthiness but of different race, ethnicity, gender or age. The CFPB has begun preliminary planning with regard to this rule. (26) (emphasis added)

Data collection about borrower and mortgage characteristics is very fraught.  Lenders have typically fought against efforts to increase such data collection as it could only hurt them if others knew their business so well.  Academics and consumer advocates have complained that data about the mortgage market is very hard to come by unless one had massive financial resources to pay private providers for it.

This was especially true, given the rapid rate of change in that market.  Working with data that is twelve months old was the same as working with outdated information during the Boom years of the early 2000s.  If the CFPB collects and analyzes data in something approximating real-time, it will be far more nimble than previous regulators.  If it shares its data with outside researchers, it is likely to become even more sophisticated in its approach to the dynamic housing finance sector.