PennyMac Mortgage Investment Trust is among those moving forward with expanding correspondent origination plans as larger players cut back, as a Securities and Exchange Commission filing released last month shows.
PennyMac recently entered into a master repurchase agreement with Bank of America that allows a subsidiary of the publicly traded real estate investment trust to sell—and later repurchase—new third-party originations in an aggregate principal amount of up to $200 million.
Of that $200 million, $100 million is committed to a loan repurchase facility that will be used to fund newly originated mortgages purchased from correspondent lenders, according to an SEC statement.
The real estate investment trust said the loans would be held for sale and/or securitization. Part of the company's long-term strategy is to position itself as a mortgage aggregator and securitizer.
PennyMac, in its third-quarter earnings report, highlighted acceleration in its correspondent purchases. The company also continues to buy distressed mortgage-related assets in the secondary market.
“Our correspondent volume has experienced tremendous growth,” Stan Kurland, the company's chairman and chief executive officer, said during the company's earnings call.
PennyMac added 21 correspondent sellers in the third quarter, bringing to 76 the number of originators it buys loans from. During the call Kurland estimated that the firm would be originating $1 billion per month by the end of next year.
Earlier this year several top B of A correspondent managers left the bank to join PennyMac. B of A is shutting down its correspondent channel.
The REIT also has repo agreements with Credit Suisse and Citigroup, but these are mostly used for financing the purchase of distressed mortgage assets.
In other correspondent lending news last month, Impac Mortgage Holdings CEO Joseph Tomkinson said in a third-quarter earnings call that his company's plans for strategic growth in the mortgage area include a correspondent channel with a focus on producing government loans for Ginnie Mae transactions and Web-based technology aimed at helping produce more leads for mortgages and real estate services.
He said the mortgage leads would be focused more on purchase transactions than refinancings.
Impac also plans to start offering renovation purchase loans through the government's 203(k) program and jumbo products it will sell to banks and private investors, Tomkinson said.
Impac earned $3.1 million in the third quarter thanks to gains from the sale of a title insurance affiliate and fees garnered from mortgage and real estate services, which offset legacy costs and charges.
In the same quarter a year ago the firm earned $974,000.
The firm sold its interest in Experience 1, a title insurance parent company, for $3.7 million, netting $1.78 million on the deal.
Mortgage and real estate services fees rose to $17.9 million compared to $15.5 million during the comparable 2010 period.
However, startup and operational costs associated with its expanding production unit have led to negative 2011 profit margins for the company's lending operations.
In the third quarter, Impac's cash within its continuing operations decreased to $8.7 million from $11.5 million.
This occurred because fees from the company's mortgage and services units were offset by expenses from operations, and costs associated with buybacks tied to a discontinued nonconforming unit.
The company said the profitability of current operations is set to improve in the future as its mortgage-related ventures move forward.
