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.

Mortgage Broker Share of Originations Hits New Low in 2Q09

Buffeted by an increasingly hostile regulatory environment as well as a mortgage industry emphasis on retail originations, mortgage brokers watched their share of new mortgages made in the second quarter of 2009 drop to the lowest level ever recorded by Inside Mortgage Finance.

According to a new analysis of mortgage originations by channel slated to be published in Inside Mortgage Finance this week, the mortgage broker share of new loan production was just 15 percent in 2Q09. This was down from 17 percent in the first quarter of the year and 27 percent as recently as 2007. Not surprisingly, the retail share of new mortgage originations rose in the second quarter to 48 percent–one of the highest levels seen since 1995.

Loss of TBW Leaves Big Hole in FHA Broker Business

The demise of Taylor, Bean and Whitaker is leaving a big hole in the market for FHA mortgages originated by mortgage brokers. According to Inside Mortgage Finance’s new special report “FHA Market Profile: First Half 2009,” TBW was by far the largest wholesale purchaser of FHA mortgages in the first six months of this year with $5.37 billion in volume.

Wells Fargo was the second largest with $4.24 billion in FHA mortgages purchased from brokers. In third place was Flagstar Bank with $3.07 billion in FHA broker business, followed by MetLife Bank in fourth place with $2.37 billion in volume. Rounding out the top five FHA wholesalers in the first half was Bank of America with $1.92 billion in business. A detailed breakdown of the top 50 FHA lenders’ business by state can be found in the new report.

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Broker Share of New Mortgages Continued to Slide in Early 2009

Mortgage brokers, who continue to be shunned by major lenders, private mortgage insurers and the secondary market, watched their share of new mortgages fall to a record low of just 17 percent in the first quarter of 2009, according to new numbers scheduled to be released this week by Inside Mortgage Finance. The broker share was down from 22 percent a year earlier and the record high of 31 percent set back in 2005.

Surprisingly, the retail share of new mortgage lending was also down on a year-over-year basis, dropping from 52 percent in 1Q08 to 46 percent in 1Q09. Meanwhile, the correspondent share of originations–boosted by a resurgence in community bank and credit union mortgage lending–has risen from 27 to 37 percent over the past year.

Mid-size Lenders Now Dominate Business with Mortgage Brokers

With a major shift away from buying loans from mortgage brokers by the largest banks in the country, mid-size lenders–often non-banks–are now dominating the broker business. According to the latest ranking by
Inside Mortgage Finance, only one major bank–Wells Fargo–made the top five lenders in terms of mortgage broker originations during the first quarter of 2009. Provident Funding in California was the top originator of loans acquired from brokers in the first quarter with a 14.1 percent market share, followed by Wells Fargo (13.6 percent), AmTrust Bank (10.1 percent), Taylor Bean & Whitaker (7.7 percent), and MetLife Home Loans (6.8 percent).

New Study to Examine Borrowers’ Reactions to Financial Stress

Nearly half of homeowners with a delinquent mortgage would elect to make a car loan payment before making a mortgage payment, according to preliminary results from a new Inside Mortgage Finance-sponsored study of mortgage borrowers and their attitudes towards handling financial stress. The new research examines how homeowners prioritize mortgage payments and under what circumstances borrowers would stop and/or resume paying their mortgage. The study is being conducted by Campbell Communications. For further information, contact John Campbell at john@campbellsurveys.com or (202) 363-2069.