Community banks and thrifts are slowly increasing their originations of non-conforming mortgages, while pulling back on making FHA loans, according to a new study from the American Bankers Association.
The 2011 annual survey of 185 banks found that 14% of their single-family loan production involved non-conforming loans, up from 11.6% in the previous year and 10.7% in 2009.
Meanwhile, Fannie Mae and Freddie conforming loans comprised 72% of loan production, down less than one percentage point from 2010, according to the ABA Real Estate Lending Survey.
FHA lending by the depository institutions took a bigger hit. The ABA survey shows FHA lending fell to 5% of loan production last year, down from 6.5% in 2010.
Roughly 86% of the respondent banks in the survey have less than $1 billion in assets. As a group, they trimmed their sales to conduits/wholesalers in 2011 and retained more newly originated loans in their portfolios. However, they increased their sales to the Federal Home Loan Banks.
The respondent institutions sold 7% of their originations to the FHLBs, up from 5% in 2010.
