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Industry Cracks $7 Trillion Mark

At year-end, the available pool of residential servicing rights cracked the $7 trillion mark, according to figures compiled by Mortgage Servicing News.

Moreover, the dollar volume of outstanding loans increased by 12% from year-end 2002 to year-end 2003, MSN found.

From year-end 2001 to year-end 2002, servicing rights increased by even more - by 13.6%.

In normal times housing debt grows by 8% or so a year, but the past two years have been anything but normal for mortgage bankers, servicers, and the customers they serve.

The lowest interest rates in 40 years have spurred record production, driven by record refinancings but also by a red-hot home purchase market.

Until the refi boom commenced in early 2002, consolidation among mortgage servicers was rampant. Consolidation has slowed somewhat since then, but is expected to pick up again once interest rates rise.

But when exactly rates will rise, and by how much, is anyone's guess. Also, continued low interest rates are making it difficult for many top-ranked servicers to maintain the hyper-growth in receivables they enjoyed before the refi boom started. (Also, the bulk market for servicing rights has dried up.)

The nation's top residential servicer, for instance, Washington Mutual of Seattle, saw its servicing portfolio stay essentially flat from year-end 2003 compared to the same period a year earlier.

Among the top five servicers, Countrywide Home Loans, Calabasas, Calif., had the strongest growth in servicing at 43%. Countrywide's growth has been fed, in part, by the company becoming the largest buyer of closed loans outside of Fannie Mae and Freddie Mac.

The top five servicers at year-end were WaMu ($726.2 billion/0% growth); Wells Fargo Home Mortgage, Des Moines ($570.3 billion/up 16%); Countrywide ($644.8 billion/up 43%); Chase Home Finance, Edison, N.J. ($470 billion/up 10%); and Bank of America ($246.4 billion/down 7%).

The acceleration in housing debt also has made it difficult for top servicers to grow their market shares by much. The No. 1 ranked WaMu has a market share of 10.26%. A year ago its market share was 11.47%. (See rankings.)

According to MSN and the Quarterly Data Report, the nation's top 25 servicers, at year-end, had a combined market share of 63.34% - a gain of 1.83 points.

The figures are based on exclusive survey data collected by MSN and the QDR. Some firms declined to give their results, which potentially affect the rankings.

Copyright 2004 Thomson Media Inc. All Rights Reserved. http://www.thomsonmedia.com http://www.mortgageservicingnews.com

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