Last years' mortgage market "reflected excess capacity and strong competition," according to the chief of Countrywide Financial Corp. -- which saw its fourth quarter production rise. And with subprime wholesalers dropping like flies, Countrywide's subprime and broker business saw double digit monthly gains.
Countrywide announced fourth quarter residential volume of $121.5 billion rose by about 7 percent from the previous quarter but was off 9 percent from the same period in 2005.
Production for all of 2006 fell to $462.5 billion from the previous year's record of $495.4 billion, the Calabasas, Calif.-based lender said.
"The 2006 mortgage market reflected excess capacity and strong competition," Angelo R. Mozilo, chairman and chief executive, said in the announcement, noting that the company's annual production downturn of less than 7 percent compared "favorably to the industry, which is forecasted to decline by 15 to 20 percent."
December fundings of 212,479 loans accounted for $41.7 billion, which is 9 percent higher than November's production, Countrywide said.
During December, companies including Aegis Mortgage Corp., Ownit Mortgage Solutions and Sebring Capital Partners LP either shut down or consolidated their subprime broker businesses. The activity seemed to fuel Countrywide's wholesale production -- which jumped to $7.8 billion last month from $6.7 billion in November, and subprime fundings, which rose 16% to $3.7 billion during December.
About 45 percent of December's volume was correspondent originations, a third was retail volume, about 19 percent came from the wholesale channel, and the rest was from capital markets and banking operations purchases, according to the announcement.
Of December's production, purchase loan fundings reportedly made up about $17 billion, while adjustable-rate mortgages accounted for $15 billion, and of these $2.9 billion had a pay-option feature.
Home equity loan fundings loan originations improved from November to $3.3 billion, Countrywide reported. For the quarter, total nonprime production, including home equity and subprime, was $20.1 billion, off from $21.8 billion during the third quarter.
The pipeline of mortgages suggests volume will worsen in January, as it ended December at $57.2 billion, compared to $62 billion as of Nov. 30, according to the announcement.
Countrywide's reported servicing portfolio of nearly 8.2 billion loans ended the year at $1.298 trillion and a delinquency rate of 5.02%. Loans with foreclosures pending accounted for 0.65% of the portfolio.