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 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.

Mortgage Originations Fell Hefty 26% in 3Q09, New Analysis Finds

New 1-4 family mortgage originations tumbled a sizeable 26 percent between the second and third quarters of this year, according to new numbers compiled by Inside Mortgage Finance. Some $410 billion in new mortgages were made in 3Q09, the lowest quarterly pace seen in 2009. This brought mortgage originations for the first nine months of 2009 to $1.41 trillion or not far behind the $1.50 trillion seen for all of 2008.

Most of the decline in third quarter originations was due to a slide in refinance activity in the Fannie Mae/Freddie Mac sector of the market. But new FHA originations held up remarkably well in the third quarter as volume actually rose 6 percent from the second quarter. FHA originations for the first three quarters of 2009 already have set a new annual record at $283 billion.

Credit Unions Post Big Mortgage Origination Gains in 2009

Benefiting from the credit crunch and the evaporation of the non-agency mortgage market, credit unions have posted big gains in mortgage lending this year. According to a new Inside Mortgage Finance analysis, credit union mortgage originations jumped 18 percent in the first half of 2009 on a year-over-year basis to reach a record-high $66.7 billion. The industry is on track to break the $100 billion mortgage origination barrier for the first time ever in 2009.

Perhaps more significantly, the credit union share of total originations has risen from an historic 2-3 percent level to a record-breaking 7
percent in 2009. Most of the growth in credit union mortgage lending this year has taken place among the larger institutions who have stepped up to fill the void left by banks that curtailed their lending in the first part of the year.

Preliminary Numbers Show Originations Fell 9% in Third Quarter

A noticeable drop in refinance activity–particularly in the Fannie Mae/Freddie Mac sector–during the third quarter appears to have taken its toll on overall mortgage originations for the period. According to preliminary numbers analyzed by Inside Mortgage Finance, 3Q09 mortgage production slipped about 9 percent from the previous quarter to reach approximately $500 billion in volume. That would bring mortgage originations for the first nine months of the year to some $1.50 trillion.

Significantly, the biggest drop in third quarter originations took place in September when refinance activity declined the most. Nevertheless, the recent drop in 30-year mortgage rates to below 5 percent is likely to boost refinance business in the fourth quarter and limit any major decline in 4Q09 originations.

Refis Accounted for 76% of Mortgages Made in First Half 2009

The refinance share of new mortgages soared to 76 percent in the first six months of 2009, according to Inside Mortgage Finance. This was even higher than the 72 percent refi market share posted during the refi boom of 2003. While the top mortgage originators in the country all benefited from this year’s refi boom, there was a surprising amount of difference among lenders.

Among the top 10 overall mortgage producers, Provident Funding in California had the highest refi share in the first half with 89 percent. US Bank Home Mortgage in Minnesota had the lowest refi share at 68 percent, followed closely by Bank of America with a 70 percent refi level.