Retail Share of Mortgage Originations Jumps in Early 2008

A general mortgage market shift away from third-party originations has significantly boosted so-called retail activity in the mortgage market. According to numbers compiled by Inside Mortgage Finance, the retail share of total mortgage originations climbed to 52 percent in the first quarter of 2008. This was the highest retail lending share ever recorded by Inside Mortgage Finance and compares to a 39 percent share just a year earlier.

Not surprisingly, the jump in retail mortgage lending was prompted by a big drop in both broker and correspondent lending in early 2008. On a year-over-year basis, originations through mortgage brokers fell from 29 to 22 percent while correspondent activity tumbled from 32 to 27 percent.

Conforming Loan Limit Appears Destined to Remain High

Although lawmakers in the Senate and House are currently debating at what level to “permanently” set the conforming loan limit, it appears very likely that the end result will be considerably higher than the $417,000 level found at the start of 2008.

Political observers suggest that legislators will end up agreeing on a new conforming loan limit at $600,000 plus. That’s a level between the “temporary” $729,750 loan ceiling in place now and the $550,000 limit approved by the Senate Banking Committee last week. Going forward the maximum amount of a mortgage that Fannie Mae and Freddie Mac can buy is expected to be applied on a regional basis.

Jumbo Share of Originations Slipped to 8% in Early 2008

The absence of a liquid secondary market for non-governmental mortgages is taking a big toll on the jumbo sector this year. According to numbers compiled by Inside Mortgage Finance, the jumbo share of total mortgage originations sank to just 8 percent in the first quarter of 2008. That was way down from the 15 percent jumbo share found a year ago.

Other sectors of the residential mortgage market that took big hits in the first three months of 2008 included: subprime, down to 2 percent from 14 percent a year ago; and Alt A, where the market share tumbled from 14 percent to 4 percent

Lawmakers Quibble on Where to Set Conforming Loan Limit

Lawmakers on the Senate Banking Committee this week broke ranks with their House counterparts by advancing a comprehensive housing bill that would permanently set the conforming loan limit at $550,000. This is markedly lower than the $729,750 ceiling approved by the full House last week.

The Senate appears to be taking a much tougher approach than the House when it comes to allowing Fannie Mae and Freddie Mac to move into what has previously been the jumbo mortgage market. Aside from the difference in the maximum loan limit, the new Senate measure specifically prohibits Fannie and Freddie from holding any so-called conforming jumbo mortgages in their portfolios.

Big Shake-Up in Ranking of MIs by Volume in 2008

Amidst an ongoing mortgage performance downturn that has hammered private mortgage insurance companies, there has been a significant shake-up in the rankings of MIs as measured by new business in 2008.

According to numbers compiled by Inside Mortgage Finance, Genworth Financial, last year’s fourth most active MI in terms of volume jumped to second place in the first quarter thanks to a huge 104 percent increase in business. Meanwhile, PMI Mortgage Insurance, 2007’s second place finisher, tumbled all the way to sixth place in the first three months of this year due to a precipitous 55 percent fall in new business.

Overall, private MI business in the first quarter was down just slightly – less than 1 percent – from year ago levels. But traditional flow business is way up while bulk coverage is way down due to the collapse of the non-agency mortgage securities market.

Fate of Comprehensive Housing Legislation in Limbo

Tomorrow, a Senate committee will begin deliberations on major housing legislation approved last week by the full House. Some 39 Republicans joined Democrats on a House 266-to-154 vote approving an FHA-led mortgage borrower rescue plan as well as FHA modernization and regulatory reform of the government-sponsored enterprises. President Bush has threatened to veto the legislation due to the bailout component.

Separately, negotiations between Democrats and Republicans in the Senate Committee on Banking, Housing, and Urban Affairs broke down late last week, further clouding the prospect for major housing legislation anytime soon.