ACB Finds Cutback in Secondary Sales

Community banks cut back on their sales of newly originated single-family loans to wholesalers and secondary-market agencies last year, and sales to Fannie Mae dropped the most, according to a survey by America's Community Bankers.The 215 institutions responding to ACB's annual Real Estate Survey sold only 24% of their loan production in 2006, down from 34% in 2005. Conduits and wholesalers purchased 40% of the $1.95 billion loans sold in the secondary market and Fannie and Freddie Mac purchased 41%. Freddie's share increased by five percentage points to 26%, and Fannie's share fell five percentage points to 15%. The survey respondents originated $20.5 billion in residential mortgages in the first nine months of 2006, and 39% expect to see an increase in loan production in 2007, while 27% expect to see a decline. The respondents are "not as optimistic as they were last year," said ACB senior vice president Debra Cope. ".... The only business where a majority saw a prospect for an increase was home equity lending." A large majority said they expect to see a decline in construction and multifamily lending.