The Disappearance of HOEPA Loans

While I'm on the subject of dead markets, what about HOEPA loans?  HOEPA loans are super-high-cost loans that qualify for special consumer protections under the Home Owners Equity Protection Act of 1998. (Yes, that's the one that directed that the Fed "shall" implement a rule on abusive lending, which the Fed understood to be discretionary until 2008.)  

HMDA data has previously been a bit of a pain to manipulate to get summary statistics--big data sets and annoying variable lables.  No longer.  The CFPB has an amazing on-line HMDA data tool that is a lot of fun to explore.  The CFPB's created the Rolls-Royce LoPucki-BRD of HMDA data.  It's a real public service. My only complaint is that the CFPB only has data going back to 2007.  Hopefully the Bureau will add in 2005-2006, at least (there was a reporting change in 2004).  The Urban Institute also has a nice HMDA data page, but it's really more for power users.  

OK.  So what's gone on with HOEPA loans?  HOEPA status was always a kiss of death, but in 2005, there were 35,980 HOEPA loans made.  In 2013 (still under the same definitions), there were just 1,873.  That's a 95% decline in HOEPA lending.  Now it might well be that lenders are making lots of loans just under the HOEPA reporting thresholds.  But there's little reason to think that they suddenly started doing that in 2013--that trick's been around for a while. Instead, what we're seeing is that high-cost mortgage lending has simply disappeared in the United States, much more so than lending has contracted in general.