FHA Financing Accounted for 37% of Home Purchases in October

FHA’s share of the home purchase market rose sharply in October as first-time homebuyers dominated the housing market. According to the latest Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market Conditions, FHA financing represented 37 percent of home sale transactions tracked last month  up from a 32 percent share as recently as August. Perhaps more importantly, FHA accounted for a whopping 61 percent of the financing used by first-time homebuyers in
October. This was up from 58 percent in August and September. The possibility that the homebuyer tax credit would expire was clearly a factor in the jump in first-time homebuyer activity as this group accounted for 47 percent of home purchase transactions tracked in October.

Click here for more info on the Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market Conditions.

Broker Share of Originations Tumbled to Record Low in 3Q09

The growing emphasis on retail mortgage lending by the country’s largest home loan producers took a big toll on mortgage brokers in the third quarter. According to new numbers compiled by Inside Mortgage Finance, the broker share of new originations plummeted to 12 percent in 3Q09–the lowest level ever recorded by the publication. As recently as 2005, brokers accounted for 31 percent of total mortgage originations.

Meanwhile, the retail share of new mortgage lending rose to 51 percent in the third quarter and the correspondent share remained unchanged at 37 percent. Wells Fargo was the top retail lender in the first three quarters of 2009, followed by Bank of America and JPMorgan Chase.

Private MI Activity Continued to Tumble in Third Quarter

Strong demand for FHA mortgages continued to put the squeeze on the troubled private mortgage insurance industry during the third quarter. According to new numbers compiled by Inside Mortgage Finance, private MI activity at the six firms still active in the business fell 22 percent between the second and third quarters of 2009. For the first three quarters of this year, private MI volume was down an even larger 60 percent on a year-over-year basis.

Among the active MI firms, fifth place PMI Mortgage Insurance posted the biggest drop in third quarter total primary insurance written with a 42 percent decline. Meanwhile, second place United Guaranty, a unit of AIG, showed the only gain in the MI industry during the third quarter with a 4 percent increase in new business.

Realtors Push for Clarification of Appraisal Code Sunset Date

The National Association of Realtors yesterday urged the Federal Housing Finance Agency and the New York attorney general to clarify exactly when the controversial Home Valuation Code of Conduct will expire as part of an agreement hammered out back in 2008. The code, which was implemented by Fannie Mae and Freddie Mac earlier this year, has been criticized by real estate interests as being overly restrictive and limiting any housing recovery. At issue is whether the code will sunset in July or November of 2010, according to terms of the original agreement between the FHFA and the New York AG’s office.

New Homebuyer Tax Credit Likely to Encourage Mostly First-Time Purchasers

The proposed move by federal lawmakers to extend and expand the homebuyer tax credit is likely to have a much larger impact on first-time homebuyers than trade-up homebuyers, according to results from the Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market Conditions. The proposal expected to be approved this week would extend an $8,000 tax credit for first-time homebuyers and add a new $6,500 credit for current homeowners who buy a new principal residence.

Because the credit would average 4 percent of the purchase price for first-time homebuyers but only 2 percent for current homeowners, a lot more first-time purchasers are expected to take advantage of the tax break. Campbell Surveys estimates an extension and expansion of the tax credits will generate about 300,000 additional home sales to first-time homebuyers and 150,000 extra sales to current homeowners. Click here for more info.

Mortgage Originations Tumbled in October, New Data Suggest

The fourth quarter didn’t start off particularly well when it came to new mortgage activity. According to the Inside Mortgage Finance MBS Database, government-related mortgage securitization–a barometer for new originations–fell a hefty 21 percent between September and October. The biggest decline took place in the Fannie Mae/Freddie Mac sector as new MBS issuance tumbled by 29 percent or $25.6 billion. The Ginnie Mae sector, which captures FHA and VA mortgage origination activity, held up much better with just a 3 percent or $1.3 billion dip in MBS issuance. Overall mortgage activity has been falling since July and the prospects for any rebound in the fourth quarter are very poor.