Despite an overall weak mortgage originations market, Flagstar Bancorp's third-quarter earnings grew 20%, due in large part to its ongoing efforts to diversify operations.

The company is facing criticism after a big chargeoff on two properties, showing that investors have little patience when a risky business model shows signs of distress.

Rising mortgage interest rates not only will continue to constrain banks' once-robust revenue from this business, they will also affect existing borrower credit quality, a report from Moody's said.

The Providence, R.I., company reported a 27% gain in profits thanks partly to a boost in fee income from its purchase of Franklin American Mortgage in August.

The Portland, Ore, company also benefited from lower expenses and an improved efficiency ratio.

MGIC Investment Corp.'s quarterly earnings were again driven by better-than-expected loss development, and those favorable results should be seen in the other private mortgage insurers' results as well, an industry analyst said.

A notable drop in home equity lending at Bank of America during the third quarter contributed to an overall decline in new single-family loans produced by the company.

Mortgage-related earnings at five banks were lower due to the effect of higher interest rates on loan volume this year, even though late-season homebuyers improved consecutive-quarter origination numbers at three companies.

D.R. Horton is selling more homes, but its cancellation rates also are higher in the company's primary fiscal year results, a sign that rising mortgage rates may be affecting the market.

First Foundation sold loans to Freddie Mac to free up space for higher-yielding credits. It then bought the securities that were formed to replace other, lower-yielding assets through an often overlooked program.