Banks Report Big Drop in Mortgage-Related Income

Retail mortgage originations by FDIC-insured institutions in the third quarter fell to the lowest level in two years as loan repurchases fell back to 2008 levels, according to a new Federal Deposit Insurance Corp. report.

Retail originations totaled $141billion in the third quarter, down 28% from the prior quarter, FDIC reported Tuesday.  

The third quarter report shows that the 1,112 reporting banks and thrifts recorded $4.8 billion in non-interest income from the sale, securitization and servicing of 1-4 family loans, down from $8.1 billion in 2Q13. After a year and a half of averaging $8 billion in non-interest income, the industry is back to 2011 levels.

FDIC requires insured depositories that originate more than $10 million in residential loans a quarter to report mortgage origination data, as well as all institutions with $1 billion or more in assets. 

Meanwhile, loan repurchases and indemnifications fell to $1.85 billion in the third quarter from $2.5 billion the prior quarter. The 3Q13 repurchase figure is the lowest since the 2Q 2008.