How to Get the Most Out of the New 2019 HMDA Data (Part I)

April 2, 2020

The HMDA LAR is a rich annual set of data about US mortgage applications processed by mortgage lenders each year. At Polygon Research, we are passionate about leveling the playing field for access to market insights. This is why today we launched a new version of our flagship HMDAVision app incorporating the 2019 data published by the CFPB earlier this week, and why we're offering our thoughts on how to get the most out of the new data. HMDA data is frequently used by lenders to benchmark their compliance activities, but we'll save this discussion for another post. Today we'd like to draw your attention to 7 ways you can use the new 2019 HMDA data for sales opportunity analysis.
Know Your Territory - and the Ones You Want to Expand Into
HMDA transactions are geocoded at the census tract level, and roll up to County, MSA, State, and US. This allows for very granular definition of market territory. You can use the data to understand the market size and whether it grew or contracted over the preceding years. In addition, you can see whether you're in a refi vs. a purchase market at a local level. You can use the data to see what product mix is driving demand, and whether this matches your own product strategy. Interest rate, closing costs, and origination charge analysis allows you to see how you compare to the market, and what adjustments you might need to make.
Scout M&A Opportunities
In our current environment, M&A activity looks to rise in prominence. With 5,502* lenders in the 2019 data, you can distill valuable information and perform due diligence analysis on potential targets. Volumes, marketing strategy, sales coverage, and product and pricing strategy can all be mined and trended in the context of the local markets year over year.

*Post updated to show the number of lenders as of 4/4/2020; the post initially cited the number of lenders made available by the CFPB on the initial date of availability for 2019 data, 3/31/2020: 5,495.
Understand the Complete Loan Cycle
One of the particular strengths of the HDMA data is that it shows the full lifecycle of mortgage applications. The Action Type field shows whether the outcome of the application, if not a purchased loan, was:
  • Originated
  • Approved but Not Accepted
  • Denied
  • Withdrawn
  • Closed Incomplete
  • PreApproval Denied
  • PreApproved Not Accepted
Once on the books, the HDMA data shows which loans are then sold and to which investors.

    Action Type by State, screen shot from HMDAVision™
    Analyze Data at the Loan Level
    As noted by the CFPB, "The HMDA data and reports are the most comprehensive publicly available information on mortgage market activity." The 2019 data set contains 17,544,246* applications and purchased loans, each with 85 fields of information, for 5,502* lenders (these numbers will continue to change as lenders submit updates and corrections). When the scope is expanded to the last 5 years, this becomes over 77 million transactions. This data footprint forces some HMDA solutions to summarize the data, at which point you can no longer control the combinations of filters you can apply to the data to answer your specific questions. Look for solutions that do not limit your view to summarized data, but which preserve your ability to both see the underlying transactions and combine them any way you need to for your analysis.

    *Post updated to show the number of transactions and lenders as of 4/4/2020; the post initially cited the numbers in the data provided by the CFPB on the initial date of availability, 3/31/2020: 17,535,779 transactions and 5,495 lenders.
    Know Your Customer
    In the last 2 years, the CFPB has released an expanded set of data points on applicant demographics. You can analyze this data to understand the buying behaviors, for example, of various age groups and income levels. The insights you derive from this analysis may inform targeted marketing and sales strategies.
    Enrich Your Sales Training
    Many mortgage lenders are struggling to find an efficient way to generate market insights and to support their sales teams cost-effectively. HMDA data bridges this gap. With it, you can onboard and train new mortgage loan officers (MLOs) with solid market analysis:
    • show individual market territories in maps and numbers
    • highlight your competitive advantages
    • see growth patterns in peer groups that represent threats or opportunities
    • prepare market briefings for sales calls
    • create marketing plans
    Perform Peer Benchmarking
    The HMDA data is rich with information about the reporting lenders. This allows you to segment and analyze peer groups and identify your peers based on data. Segment peers along all available dimensions including geography, regulator, lender type, and/or performance. This is helpful for identifying market capacity, gaps, correspondent partners, and for establishing targets.
    Performing sales opportunity analysis based on the available HMDA data is easy and intuitive with HMDAVision. We have wrangled and modeled the data in our cloud analytics platform and have made it accessible on any device with no need to download software.

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