MGIC Finds Lender Retention Rates Rising

A study by MGIC Investor Services Corp., Milwaukee, has found that lenders increased their retention rates slightly between November 2001 and November 2002.In November 2001, retention rates were 21.6%; by November 2002, they had increased to 24.5%. "The record $2.5 trillion origination market, 60% of which were refinances, caused stress on the loan processing infrastructure of all servicers," said Mark E. Marple, MGIC's vice president for mortgage banking strategies. "Servicers are increasingly concentrating their efforts to win back previous customers and retain existing customers -- and we are seeing signs of success. For example, when comparing the retail channel to other channels of business, we find that retention rates are nearly 40% higher." In March 2003, retention rates for the month hit just over 15%. But as prepayment rates started to rise, so did servicer portfolio defense mechanisms, allowing them to retain more loans, Mr. Marple said.