Broker Share of Originations Hits New Low in 3Q08

Battered by an ongoing move away from using mortgage brokers by major lenders, the broker share of originations fell to just 18 percent in the third quarter of 2008, according to new numbers compiled by Inside Mortgage Finance. This was not only way down from the 28 percent broker share for all of 2007 but also the lowest level ever recorded by Inside Mortgage Finance.

Significantly, the decline in broker originations has paralleled a rise in correspondent originations. The share of new originations coming through correspondents, or third-party originators willing to accept recourse, jumped to 37
percent in the most recent quarter. That was up from the 29 percent level seen in 2007 and the highest correspondent share posted in 10 years. Meanwhile, the retail share of originations stood at 45 percent in 3Q08  up slightly from 43 percent in 2007.

Mortgage Rates Tumble on Fed Pledge to Buy Agency MBS

Long-term mortgage rates tumbled yesterday on news that the Federal Reserve planned to invest as much as half a trillion dollars in the agency MBS market in the coming months. According to numbers compiled by Inside Mortgage Finance, the Fed’s pledged investment would amount to 60 percent or more of all Ginnie Mae, Fannie Mae and Freddie Mac expected MBS production over the next year.

The government’s move is aimed at significantly improving pricing on agency MBS, which currently are funding close to 90 percent of all mortgages being made in the U.S. If the government’s efforts succeed, the mortgage market could see prime 30-year fixed rate loans near 5 percent by early next year.

Lawmakers Push for Federal Foreclosure Relief Initiative

Lawmakers on the House Financial Services Committee yesterday grilled Treasury Secretary Hank Paulson on why the government had not used some of the $700 billion in TARP funds for a foreclosure relief initiative. Paulson pledged to work on funding some sort of foreclosure relief effort but was fuzzy on the timetable or the form a mortgage bailout plan might take.

Lawmakers as well as some regulators have voiced strong support for the aggressive loan modification proposal advanced by the FDIC and its chairman, Sheila Bair. The price tag for the FDIC plan, which involves government insurance for modified mortgages, has dropped to $25 billion- a level that looks like a relative bargain in Washington, DC these days.

Inside Mortgage Finance is hosted an audio conference on TARP and the various foreclosure relief programs under consideration on November 20.

Click here for more info.

Non-Government Related Share of Originations Falls to 8%

The ongoing credit crunch continued to batter the residential mortgage market in the third quarter of 2008 as the non-government supported share of new loan originations fell to just 8 percent, according to
numbers compiled by Inside Mortgage Finance.

The jumbo share of mortgage production slipped to 6.3 percent in the most recent quarter, the lowest level ever recorded by Inside Mortgage Finance. Meanwhile, non-prime subprime and Alt A lending continued its freefall in 3Q08, ending the period with a slim 1.7 percent share of new mortgages. Even home equity lending is down dramatically this year, falling 47 percent in just the third quarter.