Outstanding residential debt serviced by mortgage banking firms fell to $9.1 trillion at yearend, the lowest reading since the third quarter of 2007, according to new figures compiled by National Mortgage News and the Quarterly Data Report.
U.S. mortgage debt peaked at $10.1 trillion at yearend 2009 and not too long ago was even larger then U.S. Treasury debt which today is just north of $15 trillion.
Declining mortgage debt is tied to three main events: the housing crisis where $1 trillion worth of loans have entered delinquency/foreclosure the past few years; declining loan production; and a trend of consumers refinancing via “cash-in” deals where they lower their mortgage debt.
Meanwhile, many top ranked firms continue to experience a decline in receivables tied to run-off and MSR sales.
In the fourth quarter Wells Fargo & Co., San Francisco, surpassed Bank of America as the nation's largest servicer: $1.82 trillion vs. $1.77 trillion. B of A had been the largest servicer ever since its 2008 ill-fated purchase of Countrywide Financial Corp. But the past two years B of A has greatly scaled back its presence in residential lending and is in the market almost monthly trying to unload legacy MSR portfolios. (In the fall B of A sold a $74 billion package to Fannie Mae.)
Wells managed to grow its MSR portfolio by 1% in Q4 but B of A's receivables fell by 15% -- thanks to sales and run-off.
The number three, four and fifth ranked servicers all experienced declines as well: Chase ($1.19 trillion/-7%), CitiMortgage ($537 billion/-11%), and Ally Financial ($382 bllion/-1%).
The largest gainer among the top 10 – by far – was Nationstar Mortgage, Lewisville, Texas, the servicing arm of the publicly traded Fortress Investment Group, New York. At yearend Nationstar serviced $106 billion of product, a 66% gain over 12 months.
On Tuesday Nationstar added $66 billion more of MSRs to its portfolio by agreeing to purchase residential receivables from Aurora Loan Services, Denver. (For a complete ranking of the nation's top 20 see the Monday paper edition of NMN.)
