Reverse mortgages (HECM) removed from the FHA universe
What prompted it
An AI assistant, asked to review the filter logic in the abstract, raised two categories of risk that had not been checked: whether business-purpose records and whether FHA-insured reverse mortgages (HECM) were being included in a universe described as "mortgage applications." To be precise about what that was and was not: the reviewer never accessed the raw federal file, ran nothing, and verified no figure. It identified a blind spot in the stated method. The measurement against the raw file, and everything that followed from it, was done here — which means this correction is self-found and self-published, prompted by an outside observation about logic rather than confirmed by an outside check of the data.
That distinction matters enough to state twice: nothing on this page constitutes independent verification. What it records is that a gap was pointed out, measured, and corrected in public.
What was found
Business-purpose records were negligible: 3,493 applications, 0.29% of the universe, moving the national rate by 0.006 points. They remain included and the effect is disclosed here.
Reverse mortgages were not negligible. HECM is an FHA-insured product with a fundamentally different underwriting process — no income qualification in the conventional sense, age-based eligibility, different failure modes. The universe contained 29,691 such applications, 2.4% of the total, and they were denied at a materially lower rate (12.3%) than the rest, pulling every aggregate downward. Including them under a headline described as mortgage denial was a definitional error, not an arithmetic one.
What changed
| Figure | Published (to 25 Jul) | Corrected |
|---|---|---|
| Decisioned universe | 1,217,297 | 1,187,606 |
| National FHA denial rate | 21.7% | 22.1% |
| Top-100 lender spread | 1.8% – 78.7% | 1.8% – 78.7% (unchanged) |
| "Incomplete application" median share | 1.2% | 1.8% |
| Carrington incomplete share | 73.5% | 75.2% |
| Metro range (1,000+ apps) | 8.9% – 31.8% | 9.0% – 32.9% |
| Cleveland inside-metro spread | 73.8 points | 73.7 points |
| El Paso small-loan penalty | 3.61× | 3.94× |
| Idaho small-loan penalty | 3.19× | 4.45× |
| State range | 14.8% – 29.0% | 15.0% – 31.4% |
| Applicant mix explains | 2.9× | 2.7× |
The central finding — a 44× spread across the 100 largest FHA lenders, which survives standardization for borrower profile — is unchanged. Every other published figure moved by between 0.1 and 1.3 points, in the direction of showing more denial, not less.
A second error found in the same pass
While rebuilding, an error in the peer-adjustment code was found and fixed: observed denials were counted over all of a lender's applications while expected denials were computed only over applications with a complete profile, inflating ratios for lenders with sparse fields. Both are now computed over the same subset, and institutions whose profile coverage falls below 50% are excluded from the adjusted measure rather than shown with an unstable ratio. This error had not appeared in any published figure — it was caught in the rebuild — but it is recorded here because a correction log that only lists errors someone else found is not a correction log.
What is now in place to prevent recurrence
The rebuild script validates its own column selection (it verifies, for example, that values read as metro codes are five digits before using them), excludes purchased loans, withdrawals, incomplete closures and the preapproval track explicitly rather than by numeric range, and prints the universe composition on every run. A pre-publication audit script scans the site for figures that no longer match the current data.