Mortgage Originations Jumped 75% in 1Q09, New IMF Data Reveals

Buoyed by a surge in refinance activity, mortgage originations jumped a big 75 percent between the fourth quarter of last year and the first quarter of 2009, according to new numbers slated to be released tomorrow by Inside Mortgage Finance. An estimated $445 billion worth of new 1-4 family loans were produced in 1Q09 –exactly the same level seen a year earlier during slightly better times.

Most of the increase in mortgage activity between the fourth and first quarters was attributable to a whopping 98 percent in Fannie Mae and Freddie Mac activity, mostly refinances. In fact, refis accounted for some 86 percent of Fannie/Freddie volume in March. While FHA originations grew only slightly during the period, FHA nevertheless posted its best quarter ever in terms of loan volume with some $80 billion in activity.

Obama Administration Offers More Aid for Loan Modifications

The Obama Administration sweetened its incentives for mortgage market players that successfully modify troubled loans by announcing this week it would add second mortgages into the bailout mix. Specifically,
Treasury said it will pay servicers $500 to modify a second loan attached to a distressed first mortgage that was receiving a modification under the recently announced Home Affordable Modification program. Also, banks and other investors holding second mortgages will be offered lump sum payments to extinguish second liens altogether.

Separately, Treasury announced it would be promoting use of the FHA’s HOPE for Homeowners program by requiring mortgage servicers using HAMP to consider H4H before modifying a troubled mortgage. To further boost usage of H4H, the government said it would now pay a hefty $2,500 incentive to servicers who successfully refinance a distressed loan using the program.

Top 4 Lenders Account for 63% of 1Q09 Mortgage Originations

The mortgage lending footprint of the top four banks in the country got a lot bigger in the first quarter of 2009, thanks to a combination of consolidation and a recent surge in refinance activity. Wells Fargo, Bank of America, JPMorgan Chase and Citi together produced a whopping $256 billion in new mortgages in 1Q09, according to preliminary numbers compiled by Inside Mortgage Finance. That amounted to 63 percent of total estimated originations for the three-month period and was up from an already large 58 percent market share for the top four banks in 4Q08.

Wells Fargo posted the biggest growth in mortgage lending in the first quarter, more than doubling its production to reach $103 billion. BofA saw slightly less growth in its mortgage volume, which rose to $89 million in the first quarter. JPMorgan Chase reported the smallest growth in mortgage lending of the top four banks, reaching just $39 billion in 1Q09. Citi rounded out the top five with $25 billion in mortgage originations during early 2009.

Mortgage Originations jumped 62% in 1Q09, New Numbers Suggest

Buoyed by low mortgage rates and a big surge in refinance activity, new mortgage originations jumped an estimated 62 percent in the first quarter of 2009 compared to the fourth quarter of 2008. According to preliminary numbers compiled by Inside Mortgage Finance based on mortgage security activity, originations climbed to about $405 billion in 1Q09. That was way up from the paltry $250 billion in volume found
in 4Q08 but still below the healthy $490 billion seen a year ago in 1Q08.

With long-term mortgage rates expected to remain near or below 5 percent for the foreseeable future, refi activity is likely to remain strong for at least the next two quarters. At that pace, 2009 originations could come in at $1.75 trillion or higher –well above previous estimates. In 2008, new 1-4 family mortgage originations totaled $1.485 trillion, according to Inside Mortgage Finance.

High-Cost States Saw Smallest Growth in GSE Mortgage Activity in 1Q09

Despite a whopping 92 percent rise in overall Fannie Mae and Freddie Mac mortgage business during the first quarter, high-cost states like California and New York failed to reap the full benefits of a surge in government-sponsored enterprise activity in early 2009. According to a new Inside Mortgage Finance analysis of GSE mortgage business by state, California witnessed only a 68 percent increase in volume while
New York saw just a 6 percent rise.

Both states have the highest concentration of jumbo mortgages, but they also benefit from having GSE loan limits above the national floor of $417,000. The fact that both California and New York lagged the overall market in terms of increased GSE mortgage activity suggests there isn’t a lot of action going on in so-called conforming jumbo loans  –or lending involving GSE-eligible mortgages above $417,000 and below $729,750.

Fannie and Freddie to Reveal Details of Refi/Loan Mod Programs

Fannie Mae’s and Freddie Mac’s efforts to embrace the Obama administration’s recent homeowner relief initiatives is the subject of a new Inside Mortgage Finance audio conference scheduled for April 23 at 3 pm EDT. Top executives at both Fannie and Freddie will provide details on both a new streamlined refinance program for GSE borrowers with little or no equity in their homes and a new loan modification program for distressed GSE borrowers. Click here for more info.