Archive for the 'Loan volume' Category
June 24th, 2009, 7:27 am by Mathew Padilla
The Mortgage Bankers Association today said its index of mortgage application volume rose 6% last week vs. two weeks ago and 17.2% vs. the same period a year ago.
On a week-to-week basis the refinance index rose 5.9% and the purchase index jumped 7.3%. However, both indexes are well below their peak levels. The association also noted a dip in rates last week:
- “The average contract interest rate for 30-year fixed-rate mortgages decreased to 5.44 percent from 5.50 percent, with points increasing to 0.99 from 0.89 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.
- The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.93 percent from 4.99 percent, with points decreasing to 0.92 from 0.99 (including the origination fee) for 80 percent LTV loans.
- The average contract interest rate for one-year ARMs remained unchanged at 6.54 percent, with points increasing to 0.11 from 0.09 (including the origination fee) for 80 percent LTV loans.”
Only 4.1% of people applied for an adjustable-rate loan.
Economics blog Calcluated Risk has this interesting background on the purchase index:
The increase in 2007 was due to the method used to construct the index. Since the MBA surveyed mostly the major lenders, when lenders like New Century went under - this pushed more borrowers to lenders included in the survey. As smaller lenders went out of business, the remaining lenders saw more applications. Plus a number of borrowers started submitting multiple applications. Both factors distorted the index.”
Yes, the index can be misleading; look how it fooled Alan Greenspan.
In other news…
Posted in: Loan volume • Mortgage rates | 25 Comments »
May 24th, 2009, 3:00 am by Mathew Padilla
For the past five months, roughly one out of every four home buyers in Orange County used a federally run loan insurance program that was practically nonexistent here two years ago.
 Now home buyers are taking advantage of loans insured by the Federal Housing Administration. One reason: they can make a down payment as low as 3.5% and that can be gifted from a relative. Another reason: the limit was raised to nearly $730,000.
The chart (click on it for larger image) shows FHA market share of purchase loans per month — it was 24.2% in April, down a tad from 25.2% in March but nearly triple a year ago.
FHA has also taken off because brokers and lenders are pushing the program to consumers. When investors in 2007 stopped buying securities backed by mortgages with no government protections, lenders increased or switched to FHA loans and also began doing more loans that can be sold to Fannie Mae or Freddie Mac, which are both under federal receivership.
Under FHA, borrowers pay a fee, and those fees go into a pool which is used to compensate lenders if borrowers default. However, if the pool is inadequate to keep up with defaults, taxpayer money could be used to fill the gap.
I haven’t seen data on what percentage of Orange County purchase loans are being sold to Fannie or Freddie, but I would guess they are making up most of the other 75% of the market.
Our federal government is keeping Orange County’s housing market on life support. How long will this go on?
NOTE: FHA figures are from MDA DataQuick. I neglected to mention the company in my original post.
In other news…
Posted in: FHA • Loan underwriting • Loan volume • numbers | 18 Comments »
May 4th, 2009, 1:51 pm by Mathew Padilla
The Federal Reserve released today results from an April survey of loan officers. One key finding:
“Respondents indicated that demand for loans from both businesses and households continued to weaken for nearly all types of loans over the survey period, an exception being demand for prime mortgages, a category of loans that registered an increase in demand for the first time since the survey began to track prime mortgages separately in April 2007.”
And here are some highlights on underwriting standards:
- 40% of loan officers surveyed said their banks tightened credit standards on loans to businesses, down from 65% in January.
- 65% said they tightened standards on loans against commercial real estate vs. 80% in January.
- 50% said they tightened standards on prime residential mortgages, up slightly from January.
- 60% said they tightened standards on credit card loans, about the same as in January.
Read more HERE.
And in other news…
Posted in: Fed • Loan underwriting • Loan volume • Meltdown • numbers | 4 Comments »
March 24th, 2009, 11:33 am by Mathew Padilla
The Mortgage Bankers Association today said it increased its forecast of mortgage originations for this year by $800 billion to total $2.78 trillion. Low interest rates are the cause.
2009 is seen as becoming the fourth highest origination year on record, the MBA said. Here’s more:
This boost is due entirely to the expected increase in mortgage refinancing activity motivated by the drop in interest rates following last week’s Federal Reserve’s announcement on the Treasury bond and mortgage-backed securities purchases programs and the Fannie Mae and Freddie Mac refinance programs. MBA lowered slightly its forecast of mortgage originations tied to home purchases.
“While the Fed has not announced that it is targeting specific rates for either 10-year Treasury rates or rates on 30-year fixed-rate mortgages, the effect of having the Fed bid in the market for a sustained period is enough to create a refinance incentive for a tremendous number of homeowners. The vast majority of mortgages originated before the latter part of 2008 are probably going to have at least a 50 basis point refinance incentive for at least the next several months, with mortgage rates hitting lows not seen since the early 1950s and late 1940s,” said Jay Brinkmann, MBA’s Chief Economist and Senior Vice President of Research and Economics.
The previous record origination years of 2002, 2003 and 2005 had large amounts of subprime loans and jumbo loans. In contrast, the 2009 originations will be almost entirely Fannie Mae and Freddie Mac-eligible loans, or eligible for FHA insurance.
The latest banking/lending stories …
… and OC housing …
… about homes in Surf City …
… and South County beaches:
Posted in: Loan volume | 3 Comments »
December 13th, 2008, 11:50 am by Mathew Padilla
Loan brokers accounted for 18.9% of all mortgages funded in the third quarter, the lowest since at least the late 1990s, according to a survey by National Mortgage News.
The decline fits with news that several large banks and thrifts have stopped working with brokers, especially on alternative mortgages.
However, small companies, dubbed “correspondents” in industry lingo, that make loans and then sell them to larger banks expanded market share to 35.6% of production in Q3, compared to a low of 29.2% two quarters ago.
Retail, when banks deal directly with consumers, accounted for the other 45.5%.
Paul Muolo, editor of NMN and co-author with me of the book “Chain of Blame,” told me brokers accounted for 30% of the business back in 2001. I had heard brokers had a much bigger market share and Muolo explained it this way (via email):
“In the old days when you heard that brokers had 70% of the business that number was misleading. The 70% figure applies to brokers and correspondents, the latter of which sell upstream. Why did the correspondent total go up? I don’t know but I would venture that the ’strong’ brokers that are left have enough capital to become mortgage bankers and are doing just that. They can’t keep the loans so they get a warehouse line and sell them at the closing. Technically, these correspondents are on the hook until the loan is bought but I would venture that in this market they would not be originating unless they have a ‘take out’ at the closing table. The largest correspondent buyers in 3Q were: Chase, BofA, Wells, and Citi. BofA inherited Countrywide’s correspondent business. Countrywide was usually the largest in this space.”
 Interesting. This begs a poll about the future of mortgage brokers…
Will brokers take back market share?
Posted in: Broker Corner • Loan underwriting • Loan volume • Polls | 21 Comments »
October 8th, 2008, 3:00 am by Ronald Campbell
Last year, 15 percent of American home loans were subprime. But subprime lenders’ market share was much, much higher in a handful of big counties.
With some glaring exceptions — Miami-Dade and Wayne County (Detroit) at the top of the list and Las Vegas, Philadelphia and Chicago a bit farther down — these mostly were suburban and exurban counties, places that gobbled up easy credit during the housing boom.
Orange County, home to most of the big subprime lenders, consumed little of what it grew. Just 12 percent of home loans by volume in O.C. were subprime last year. The county ranked 60th in subprime market share among the 87 U.S. counties with home loan volume of $5 billion or more.
Here are the top 10, with prime and subprime volume in billions of dollars. All figures are taken from the government’s Home Mortgage Disclosure Act (HMDA) database.
| Rank |
County |
Prime |
Subprime |
Total |
Percent subprime |
| 1 |
Miami-Dade, FL |
$16.9 |
$7.0 |
$24.0 |
29.3% |
| 2 |
Wayne, MI |
$4.2 |
$1.5 |
$5.6 |
26.1% |
| 3 |
Prince George’s, MD |
$8.9 |
$3.1 |
$12.0 |
26.0% |
| 4 |
Broward, FL |
$13.1 |
$4.4 |
$17.5 |
25.2% |
| 5 |
San Bernardino, CA |
$16.4 |
$4.8 |
$21.2 |
22.8% |
| 6 |
Essex, NJ |
$5.0 |
$1.4 |
$6.4 |
22.3% |
| 7 |
Orange, FL |
$8.4 |
$2.3 |
$10.7 |
21.2% |
| 8 |
Kern, CA |
$4.7 |
$1.2 |
$5.9 |
21.0% |
| 9 |
Lee, FL |
$5.7 |
$1.5 |
$7.1 |
20.9% |
| 10 |
San Joaquin, CA |
$5.0 |
$1.3 |
$6.3 |
20.4% |
Continue reading to see the list of 87 counties with home loan volumes of $5 billion or more.
Read the rest of this entry »
Posted in: Loan volume • Meltdown • Subprime news | Post a Comment »
October 6th, 2008, 7:01 am by Ronald Campbell
So who was the biggest home lender in Orange County and the state last year?
Hint: It ran a very annoying ad campaign.
Another hint: Terminated with extreme prejudice.
Yep, WaMu.
Washington Mutual easily outdistanced Wells Fargo and Bank of America, according to our analysis of The Fed’s Home Mortgage Disclosure Act database. Countrywide, which operates under two names, was close behind.
WaMu was a big subprime player, and that helped make it among the biggest casualties in the credit crunch last month. It also helped WaMu lead the mortgage market in Orange County, making $5.4 billion in mortgages, which accounted for 13% of the $40.4 billion total.
Two other members of the top 10 mortgage lenders — Countrywide and IndyMac — also failed or were swallowed up, and a third, World Savings, played a part in parent Wachovia’s forced trip to the altar.
Here’s an interesting stat: Bank of America and Countrywide Financial together accounted for 19% of the market in O.C., or nearly 1 in every 5 loans made. Those two companies are now one.
And how about the other big mergers? Wells Fargo is buying Wachovia, and JPMorgan Chase took over WaMu. Wells, Wachovia, JP Morgan, WaMu, BofA, and Countrywide together last year did a combined $20.2 billion, or nearly half the market. If the Wells-Wachovia deal goes through, then there will be only 3 independent companies, where once there were six making 1 out of every 2 loans in Orange County.
Below are the top 10 mortgage lenders in Orange County in 2007:
| Lender |
Prime |
Subprime |
Total |
Subprime percent |
| WASHINGTON MUTUAL BANK |
$4.8 billion |
$662 million |
$5.4 billion |
12.2% |
| WELLS FARGO BANK, NA |
$3.3 billion |
$51 million |
$3.4 billion |
1.5% |
| BANK OF AMERICA, N.A. |
$2.7 billion |
$62 million |
$2.7 billion |
2.3% |
| COUNTRYWIDE HOME LOANS |
$2.4 billion |
$302 million |
$2.7 billion |
11.1% |
| COUNTRYWIDE BANK, FSB |
$2.1 billion |
$295 million |
$2.4 billion |
12.3% |
| WORLD SAVINGS BANK, FSB |
$1.3 billion |
$551 million |
$1.9 billion |
29.3% |
| JPMORGAN CHASE BANK |
$1.7 billion |
$39 million |
$1.7 billion |
2.2% |
| INDYMAC BANK, F.S.B. |
$1.4 billion |
$329 million |
$1.7 billion |
19.3% |
| CITIMORTGAGE, INC |
$1.1 billion |
$9 million |
$1.1 billion |
0.8% |
| ABN AMRO MTG GROUP INC |
$806 million |
$2 million |
$808 million |
0.3% |
And here are the top 10 statewide:
| Lender |
Prime |
Subprime |
Total |
Subprime percent |
| WASHINGTON MUTUAL BANK |
$46 billion |
$8.4 billion |
$54.4 billion |
15.5% |
| WELLS FARGO BANK, NA |
$37.6 billion |
$940 million |
$38.5 billion |
2.4% |
| BANK OF AMERICA, N.A. |
$32.3 billion |
$490 million |
$32.8 billion |
1.5% |
| COUNTRYWIDE HOME LOANS |
$23.5 billion |
$3.4 billion |
$26.8 billion |
12.5% |
| COUNTRYWIDE BANK, FSB |
$20.5 billion |
$3.2 billion |
$23.7 billion |
13.4% |
| WORLD SAVINGS BANK, FSB |
$14.3 billion |
$5.9 billion |
$20.2 billion |
29.1% |
| INDYMAC BANK, F.S.B. |
$13.8 billion |
$3.8 billion |
$17.6 billion |
21.6% |
| JPMORGAN CHASE BANK |
$14.3 billion |
$490 million |
$14.8 billion |
3.3% |
| CITIMORTGAGE, INC |
$11.4 billion |
$160 million |
$11.5 billion |
1.4% |
| NATIONAL CITY BANK |
$6.3 billion |
$880 million |
$7.1 billion |
12.3% |
Here’s more of our mortgage meltdown coverage:
Posted in: Alt A news • Bank woes • Countrywide • IndyMac • Loan volume • Meltdown • Subprime news • Uncategorized • Washington Mutual | 5 Comments »
October 4th, 2008, 3:00 am by Ronald Campbell
Orange County may have been home to the largest subprime lenders in the country, but to really see subprime lending in action you have to go elsewhere:
- To traditionally poor areas like the Rio Grande Valley in Texas and to parts of Arkansas, Louisiana and Mississippi.
- To fast-growing exurbs and paved-over farmland like the Inland Empire and the San Joaquin Valley.
- And to two of the hottest centers of the late housing boom, Nevada and Florida.
We’re looking today at geographic patterns in home lending. Our source is the Fed’s Home Mortgage Disclosure Act database.
Since 2004 the Fed has required lenders in their HMDA reports to break out loans carrying interest rates at least 3 percentage points higher than the comparable Treasury bill. The Fed believes these high-priced loans are equivalent to subprime and Alt-A loans, though the industry defines those loan categories by credit scores, not interest rates.
Here are maps showing subprime volume as a percentage of all home loan volume by county and by year. The scale is the same for every map: yellow where subprime is 20 percent or less of total volume, green for 20 percent to 30 percent, light blue for 30 percent to 40 percent and dark blue where the subprime volume exceeds 40 percent.
The patterns are striking. In 2004 subprime was big in only a few areas of the country, most notably Texas and the Deep South. By 2005 it had built strongholds in Riverside and San Bernardino counties and especially in the San Joaquin Valley. By 2006 subprime was everywhere. But in 2007, when big players like Irvine-based New Century abruptly collapsed, the subprime wave rolled back.
Click on the thumbnails to see larger maps.
2004
2005
2006
2007
2004-2007 summary
Coming next week: a closer look at California.
Here’s more of our coverage of the mortgage meltdown:
Posted in: Alt A news • Bank woes • Loan volume • Meltdown • New Century • Subprime news | 8 Comments »
September 11th, 2008, 3:05 pm by Ronald Campbell
This just in: 2007 was a bad year for mortgage lenders and borrowers.
The Federal Reserve just released a nationwide summary of mortgage data for 2007, collected under the Home Mortgage Disclosure Act. Among the, uh, highlights:
- The total number of home loan applications fell by 6 million, from 27.5 million in 2006 to 21.4 million in 2007.
- The number of loan originations fell by 3.5 million to 10.4 million.
- “Higher-priced” (translation: subprime and Alt-A) loans were a much smaller share of the market, declining from 28.7 percent of home loans in 2006 to 18.3 percent in 2007.
- 169 lenders that reported loans in 2006 disappeared from sight in 2007. They were virtually all mortgage companies, not banks, thrifts or credit unions. Some of the companies that vanished probably made loans in 2007 before shutting down, the Fed says, so the real number of loans made in 2007 is higher than reported.
- As subprime bit the dust, plain-vanilla FHA loans expanded by 20 percent.
- “Piggyback loans” — simultaneous first and second mortgages on the same home — plunged. The Fed estimates there were 1.37 million piggyback loans in 2005, 1.43 million in 2006 and just 600,000 in 2007.
That’s it. And in other cheery mortgage news…
Posted in: Alt A news • Credit Crunch • FHA • Fannie & Freddie • Fed • Loan volume • Subprime news • Add new tag • Alt-A • Fed • mortgages • subprime | 5 Comments »
August 19th, 2008, 12:05 am by Mary Ann Milbourn
Government-insured home loans in July soared to 29.1% of all home loan applications, up from 8.4% just 12 months earlier, reports the Mortgage Bankers Association.
 Although the share of applications that are government-insured has been increasing since February 2007 — the beginning of the mortgage implosion — the MBA says it didn’t start showing significant increases until this year.
In the 18 years the MBA has been tracking applications, the lowest share of government-insured loans was in August 2005, when they dipped to 5.8% of all mortgages. The highest was in February 1990 when 43.8% of applications were government-insured.
Here are some of the reasons the MBA says government-insured mortgage applications are up:
- The Economic Stimulus Act of 2008 temporarily raised the Federal Housing Administration (FHA) and conforming loan limits for most areas in the country, which broadened FHA financing for more borrowers. The passage of the Housing Bill in July 2008 made these higher loan limits permanent.
- Data from the U.S. Department of Housing and Urban Development show that the level of conventional to FHA refinance applications increased 317% on a year over year basis in July, the bulk of which is likely from subprime ARM products.
- The level of conventional to FHA refinance endorsements has increased 260.8% on a year over year basis. Based on the MBA survey, application volume for government-insured loans was up 133.9% in July from a year ago, while application volume for conventional loans was down 50.2%, evidence of a shift from conventional to government-insured mortgages.
- FHA loans typically have lower down payments than those offered by Fannie Mae and Freddie Mac. Generally the maximum loan to value ratio for FHA loans is 97% and 95% for the Government Sponsored Enterprises (GSEs).
- Conventional GSE loans typically have higher credit score requirements than FHA loans.
- The higher application and endorsement activity for government-insured loans highlights the need for FHA modernization.
For other mortgage news…
Posted in: Credit Crunch • FHA • Loan volume • loan applications • mortgage bankers association | 4 Comments »
July 28th, 2008, 1:58 pm by Mathew Padilla
The Associated Press reports that the Bush administration and four top banks Monday endorsed a new way to pump money into the ailing mortgage market. It’s called a covered bond.
Treasury Secretary Henry Paulson said, “As we are all aware, the availability of affordable mortgage financing is essential to turning the corner on the current housing correction. … We are at the early stages of what should be a promising path, where the nascent U.S. covered bond market can grow and provide a new source of mortgage financing.”
So how do covered bonds work? Here’s what the AP story said:
Covered bonds are issued by banks and backed by cash flows from mortgages or other types of debt. Under this approach, banks guarantee the bonds, thus providing an incentive for less risky lending practices. Unlike mortgage backed securities, covered bonds remain on the balance sheet of the bank that sells the bonds.
They are reportedly popular in Europe, where the market for covered bonds is nearly $3 trillion.
To read the full story CLICK HERE.
Related topics …
Posted in: Bailout Buzz • Loan underwriting • Loan volume • Mortgage rates • Mortgage securities • Regulation | 3 Comments »
July 3rd, 2008, 10:46 am by Mathew Padilla
Iggys House, a company I wrote about a year ago for trying to change how borrowers get loans online, is retooling its approach, according to an executive and report in Inman News.
Rumors questioned its solvency and whether it is for sale because its web sites are down this week, but those are totally unfounded rumors, said David Cohen, a Lake Forest resident who heads the mortgage unit, which is now Iggyshousehomeloans.com and used to be buysidemortgage.com.
The initial pitch of Iggyshouse.com and one of its related sites was to list homes on the MLS for free and rebate 75% of the seller’s commission in a home sale to the buyer. It keeps the other 25%.
Among its sweetened offers to be revealed next week will be an additional 5% discount if the homebuyer gets a mortgage via the online site, Cohen said. As I wrote last year, part of Iggys House is an online mortgage brokerage, where ‘brokers’ are salaried employees. They do not earn a commission for closing a loan. But they do get money from the lender, known as a yield spread premium, for each loan.
Still, there may be more going on here.
Inman News quotes Joseph Fox, the chief executive of Iggys House, as saying some brokers are no longer with the company and that he could not provide many details on the restructuring.
Fox and his brother Avi founded BuySide Realty, a buyer-focused discount company that was the predecessor to Iggys House. They had previously founded online brokerage Web Street Securities, which they sold to E*Trade in 2001 for $45 million in stock.
Glenn Roberts Jr. of Inman writes that there were plans to take Iggys House public as well, but that didn’t work out.
The company previously reported a loss of $3.15 million for the first half of last year, according to Inman.
Related news:
Posted in: Loan volume | 9 Comments »
June 19th, 2008, 7:00 pm by Jeff Collins
 Raphael Bostic, associate director at the USC Lusk Center, said at a recent Orange County briefing that the home loan industry may start getting back on its feet a year from now as Wall Street resumes buying mortgages from lenders.
Bostic (pictured) said that during last summer’s credit crunch, financial markets “experienced an almost immediate shutdown of the secondary markets.” When will it end?
“It is not conceivable that the secondary market will be in this state a year from now,” he said. “The regulatory structure will be in place to create certainty and stability to reengage.”
But not to the extent as before the 2007 subprime meltdown. Such products as negative amortization loans — in which loan balances get bigger over time — won’t be around, Bostic said.
Related topics:
Posted in: Loan underwriting • Loan volume • Mortgage securities • Subprime news | 5 Comments »
June 4th, 2008, 12:40 pm by Mathew Padilla
Reuters reports that a mortgage industry index measuring loan applications fell for a third straight week, reaching the lowest level since April 2002.
The index, by the Mortgage Bankers Association and adjusted to compensate for Memorial Day, dropped 15.3 percent for the week ended May 30 vs. a week earlier.
That index measures all loan applications. Breaking it down further shows refinance demand dropping more than buyer demand.
The association’s refinance index fell 25.7 percent week-over-week. The purchase index slid 5.4 percent.
To read the full Reuters story CLICK HERE.
Related Links:
Posted in: Loan volume • Mortgage rates | 7 Comments »
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