CFPB: Refi Loans Drove Increase in 2020 Closed-End Originations

The Consumer Financial Protection Bureau issued another report of its analysis of Home Mortgage Disclosure Act data on Thursday, noting closed-end mortgage originations, as well as applications, increased substantially between 2019 and 2020.

The report said closed-end originations (excluding reverse mortgages) increased in 2020 by 65.2 percent, from 8.3 million in 2019 to 13.6 million in 2020. Most of the increase was driven by the refinance boom observed in 2020. The data point also notes that, while the number of financial institutions reporting 2020 HMDA data declined compared to 2019, the number of closed-end records in 2020 increased compared to the previous year.

The report also noted while mortgage activity generally increased, year over year, significant differences between demographic groups persisted, including higher interest rates and denials among Black and Hispanic consumers in the mortgage market.

“Initial observations about the nation’s mortgage market in 2020 are welcome news, with improvements in the overall volume of home-purchase and refinance loans compared to 2019,” said CFPB Acting Director Dave Uejio. “Unfortunately, Black and Hispanic borrowers continued to have fewer loans, be more likely to be denied than non-Hispanic White and Asian borrowers, and pay higher median interest rates and total loan costs. It is clear from that data that our economic recovery from the COVID-19 pandemic won’t be robust if it remains uneven for mortgage borrowers of color.”

The 2020 HMDA data mark the third year of data that incorporates amendments made to HMDA by the Dodd-Frank Act. Changes included new data points, revisions to certain existing data points and authorizing the CFPB to require new data points. The CFPB issued a final rule implementing significant changes in October 2015, reflecting the changing needs of homeowners and evolution in the mortgage market. Because these changes began with the 2018 HMDA data, today’s report only covers HMDA data from 2018 to 2020 and focuses on trends in mortgage applications and originations during these three years.

Other report findings:

–4,472 financial institutions reported at least one closed-end record in 2020, down from 5,505 financial institutions who reported in 2019;

–Home-purchase loans secured by site-built, one-to-four-family properties increased by about 387,000, whereas the number of refinance loans increased by 149.1 percent from 3.4 million in 2019 to 8.4 million in 2020;

–Open-end line-of-credit originations (excluding reverse mortgages) in 2020 decreased by 16.6 percent, from 1.04 million in 2019 to 869,000 in 2020;

–The share of loans secured by closed-end home-purchase loans for site-built, one-to-four-family, first lien, principal-residence properties for Black borrowers increased in 2020 and the share of refinance loans for Asian borrowers increased in 2020; and

–The refinance boom observed in 2020 largely continued the trends since the second quarter of 2019. 

The report can be found at