Banks are far more preoccupied with regulatory issues than an expected decline in home loan originations, according to a survey that also identified the biggest aggregators and top providers of origination and underwriting technology.
In 2013, the biggest aggregator of mortgages was U.S. Bank. The company moved up from its No. 2 position in 2012.
Last year’s second place winner was Wells Fargo, which relinquished its No. 1 standing in the previous year.
The results were discussed by the American Bankers Association in its 21st Annual ABA Real Estate Lending Survey Report.
The 2014 report reflected the participation of 208 banks in the survey. Nearly two-thirds were commercial and more than a third were savings institutions. More than three-quarters had less than $1 billion in assets.
The third-biggest mortgage loan aggregator in 2013 was the Federal Home Loan Bank system, followed by BB&T and Franklin American.
The No. 1 loan origination system used by surveyed banks was Ellie Mae’s Encompass.
Tied for second were Harland’s Laser Pro LOS and EasyLender from Fiserv.
Mortgagebot was third among LOS systems, Wolters Kluwer’s ARTA followed and Calyx’s Point and Wolters Kluwer’s Compliance One tied for No. 5.
Desktop Underwriter was used by 27 percent of the group, 16 percent were Loan Prospector users and more than a third used both automated underwriting systems.
Average 2013 residential loan production at participating banks was $184 million.
In addition, another $17 million in home-equity lines of credit, and $9 million second trust deeds were funded by the average participant.
The retail channel accounted for 82 percent of the banks’ 2013 originations. Wholesale production made up 9 percent, and 6 percent came from the Internet. There has hardly been any change in channel share for two years.
Refinances accounted for 56 percent of 2013 originations. Refinance share fell from 62 percent in 2012.
The bankers relied far less on refinances than the overall mortgage market, with refinance share for all originations — for banks and non-banks — estimated at around 62 percent last year and roughly 71 percent in 2012.
Non-QM loans accounted for 16 percent of 2013 production.
After new Dodd-Frank rules went into effect in January, one-third of banks said they wouldn’t do non-QM lending, while 29 percent restricted non-QM lending to targeted markets or products. More than a third said they planned to make no changes.
While, 38 percent said new Dodd-Frank regulations caused them to reconsider their commitment to mortgage lending — just 2 percent indicated the Ability to Repay/QM rules drove them entirely out of mortgage lending.
Of those who were proceeding with non-QM lending, 95 percent planned to hold the assets as portfolio investments.
A fifth of banks expected no measurable impact on mortgage lending levels because of ATR and QM rules, and the rest were evenly split about whether there would or wouldn’t be a measurable impact.
Non-conforming loans accounted for 15.0 percent of last year’s originations, growing from 13.7 percent in 2012 and 14.0 percent in 2011.
First-time homebuyer share inched up to 13 percent last year from 11 percent in 2012. The 2013 share was the highest since 2007.
The proportion of activity that was 30-year fixed-rate climbed to 50.3 percent in 2013 from the prior year’s 46.3 percent.
Just 11 percent of survey respondents indicated that they are contemplating selling mortgage servicing rights because of new regulatory requirements or capital treatment.
Four of the five biggest concerns for the residential lending market in 2014 — cost of compliance, regulatory burden, continuing impact of Dodd-Frank and QM/ATR impact — are all related to regulation.
The No 4 concern was “lack of loan volume/demand.”
