Refis Dominate First-Half of '04 Production
Almost 60% of the $1.4 trillion in home loans funded in the first half were refinancings, according to survey figures compiled by Mortgage Servicing News.
In the first half of last year refis accounted for a record 75% of all mortgages originated.
This newspaper also found that retail lenders continued to dominate the market in the first half, accounting for 44.1% of all loans funded in the U.S.
Wholesale and correspondent fundings comprised the rest - some 55.9% of all mortgages. In times of heavy refi activity (such as the past two years), retail channels tend to do well as the nation's mega-lenders recapture loans that are already in their portfolio.
Most mortgage bankers believe production will drop steadily from the second quarter when the industry funded $818 billion. (In the first quarter lenders originated $610 billion.)
The first half was a good one for many firms, particularly subprime lenders, but overall volume fell by 29.7% compared to the first half of 2003. (Last year was a record year for residential production with $3.9 trillion in loans funded.)
But in the first half of this year subprime production totaled $277 billion, an amazing 66% increase from the first two quarters of 2003.
Mortgage executives say many conventional lenders are now testing the subprime and alternative-A waters as a way to compensate for declining volume in Fannie Mae/Freddie Mac product.
Conversely, profit margins in subprime are declining.
In the first half Countrywide Home Loans, Calabasas, Calif., was the nation's largest funder, originating $175.8 billion.
Countrywide's volume fell 24% in the first half. Wells Fargo Home Mortgage, Des Moines, ranked second with $160.8 billion (down 32%); followed by Washington Mutual ($136.5 billion/down 42%); Chase Home Finance, Edison, N.J. ($94.5 billion/down 32%); and CitiMortgage, O'Fallon, Mo. ($52.8 billion/up 12%.)
Even though many firms suffered production declines in the first half, five lenders among the top 20 posted gains: CitiMortgage; Golden West, Oakland (up 45%); Aurora Loan Services of Colorado (up 25%); HSBC Mortgage, Depew, N.Y. (up 39%); and IndyMac, Pasadena, Calif. (up 13%).
Citi's production has been boosted by its acquisition of other firms. Golden West is an ARM lender, and Aurora and Indy Mac are top players in the alt-A niche.
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