American Home Mortgage Investment Corp. saw its residential production increase for the fourth consecutive quarter. Meanwhile, as earnings tumbled, the company noted an improvement in the secondary market.
First quarter loan originations amounted to $16.7 billion -- a record, the Melville, N.Y.-based company announced Monday. Production climbed from $15.5 billion in the prior quarter and $13.2 billion a year earlier.
Fundings have increased each of the past four quarters, according to American Home.
The real estate investment trust said refinances accounted for 61 percent of the latest quarter's activity while adjustable-rate mortgages accounted for 40 percent.
The pipeline of applications rose to $15.4 billion from $11.3 billion the prior quarter, American Home reported. The pipeline increased despite February's elimination of high loan-to-value and stated-income programs. For all of this year, production is projected between $68 billion to $74 billion.
American Home boasted a market share of 2.5 percent.
The company's loan servicing portfolio reportedly ended the period at $50.4 billion. The weighted average note rate on the servicing portfolio was 7.30 percent. Delinquency at the company was impacted by early payment defaults.
Net income was $30.7 million, according to the report, tumbling from $64.7 million the prior period.
"A severe disruption in the secondary mortgage market caused the prices we received for our loan production to be far less than in previous quarters," CEO Michael Strauss explained in the statement. "Our company's gain-on-sale margin, excluding delinquency related charges, was 1.09% during the first quarter compared to 1.52% during the fourth quarter of 2006. Also, during the first quarter our company set aside a record level of reserves for delinquency related charges."
But Strauss noted that the secondary market appears to be stabilizing.
"During April, more loan buyers have been bidding to buy our loan pools," he added. "Additionally, spreads on some junior mortgage securities have retraced a portion of the sharp widening that occurred in March, junior mortgage securities are trading in a more orderly fashion."