NCUA: In 2022, CUs Provided More Mortgages Than Banks to Targeted Populations
Study used complex formula developed by FHFA.
Credit unions in 2022 tended to provide more mortgages to low-income or minority borrowers and in low-income and minority areas than banks did, the NCUA’s Office of Chief Economist said Wednesday.
However, the agency said credit unions did not lend to those people and in those areas more than HUD-regulated lenders. Many of those lenders were non-depository institutions.
“OCE’s analysis generally shows that, within the confines of the social criteria outlined in the framework, credit unions exhibit mixed results,” the office, said, in its research.
The analysis also suggests that larger credit unions, overall, tended to lend more to those populations and in those areas than their smaller credit union counterparts.
FHFA Social Index Score
The chief economist used the FHFA’s Social Index scores to evaluate the “social attributes” of mortgages originated in 2022. That framework scores a given pool of mortgages on eight criteria, including whether a loan was made to a low-income borrower, to a minority borrower, in a low-income area, or in a minority census tract. Using those measures, the pool of mortgages can be given a Social Criteria Score.
The chief economist’s office noted that credit unions are somewhat constrained by their fields of membership when they make lending decisions.
The study showed that among first-lien mortgages for single-family, primary residence homes, 56% of credit union mortgages met at least one of the standards associated with the Social Index, compared with 58.9% for non-credit union loans.
Released at DEI Summit
The results were released, as the NCUA opened its Diversity, Equity and Inclusion Summit on Wednesday.
NCUA Chairman Todd Harper said the research shows that credit unions should improve their lending to targeted populations.
“To live up to their statutory mission of meeting the credit and savings needs of members, especially those of modest means, credit unions can do better in making mortgages to people of color, in underserved communities, and for low-income borrowers,” he told those attending the summit.