Just as rising interest rates and tighter lending criteria have affected the nation overall, the number of home loans fell 14.1 percent between 2012 and 2013 in rural areas, according to data obtained from the Home Mortgage Disclosure Act (HMDA).
Although showing some improvement, home purchase loans in rural and smaller communities remain 52 percent below pre-2006 levels.
Following the housing crisis, the government’s role in rural home lending increased through the Federal Housing Administration’s (FHA) mortgage insurance program, the Veterans Affairs (VA) lending programs and the Department of Agriculture’s loan guarantee programs.
Prior to the recession, 90 percent of first-lien home purchase loans were conventional loans, but that number fell to just above 50 percent by 2009. Although the level of conventional lending is 41 percent of what it was in 2004, during the last three years, conventional home purchase originations rose by 14 percent while government assisted loans dropped 17 percent.
Roughly 11 percent of rural home purchase loans were classified as “high-cost” versus seven percent of urban/suburban mortgages, due in part to the higher incidence of manufactured homes in rural areas financed with personal property loans, which often have higher interest rates. Interest rates of 1.5 percentage points higher than the annual percentage rate (APR) on prime mortgage loans are classified as “high-cost.” Due to so-called ‘unintended consequences’ of the Dodd-Frank Act, half of rural manufactured home purchase loans as reported through the HMDA were considered “high-cost.” ##
(Graphic credit: DailyYonder/Housing Assitance Council)
(Story submitted by Matthew Silver to Daily Business News – MHProNews)
