The mortgage servicing portfolio and residential lending assets shrunk at Flagstar Bancorp Inc., but home loan originations expanded.
From July 1 through Sept. 30, mortgage loan originations were $7.187 billion, third-quarter earnings data indicate.
Business picked up from the second quarter, when $5.951 billion in home loans were closed.
But, in line with industry-wide trends, business sank from the third-quarter 2013, when Flagstar originated $7.737 billion.
In the first nine months of 2014, mortgage production amounted to $18.004 billion.
Third-quarter 2014 originations included $4.6 billion in correspondent acquisitions, $1.4 billion in broker business and $0.3 billion in retail fundings.
Refinance share climbed to 38 percent from 36 percent in the second quarter.
Flagstar projected that mortgage locks will decline with normal seasonal fluctuations but could strengthen from strong October volume and a favorable rate environment.
The Troy, Mich.-based company reported a total mortgage servicing portfolio of 144,405 loans for $30.248 billion as of the end of last month.
The servicing portfolio was off from 154,023 loans for $29.411 billion as of the end of the second quarter and plummeted from 400,339 loans for $78.927 billion at the same point last year.
The Sept. 30, 2014, servicing portfolio included 122,788 loans for $26.378 billion that were serviced for third parties.
Flagstar’s investment portfolio included $2.640 billion in residential assets. Mortgages assets declined from $2.779 billion in the previous period and $2.961 billion in the year-earlier period
The latest total included $2.225 billion in first mortgages, $0.154 billion in second mortgages and $0.262 billion in home-equity lines of credit..
Warehouse lending assets fell to $0.595 billion from $683 billion but increased from $0.390 billion one year prior.
Commercial real estate holdings grew to $0.567 billion from $523 billion as of June 30 and $421 billion as of Sept. 30, 2013.
The repurchase pipeline was reduced to $31 million as of the latest period from $155 million one year earlier.
Flagstar reported a $38 million loss before income taxes, swinging from a $37 million second-quarter profit and a $14 million third-quarter 2013 profit.
“We took significant action during the quarter to reduce risk,” Flagstar Bancorp President and Chief Executive Officer Alessandro P. DiNello said in the report. “First, we settled with the Consumer Financial Protection Bureau for claims arising out of loss mitigation practices and default servicing operations dating back to 2011. We also recognized additional expense related to certain government insured loans. Adjusting for these items, we would have achieved a modest profit in a difficult mortgage market, reflecting our sustained commitment to both growing operations and controlling non-interest expenses.”
As of Sept. 30, Flagstar employed 233 loan officers and account executives, 27 fewer than as of June 30. As of the end of the third quarter last year, the mortgage sale force stood at 359 people.
In addition, there were another 2,492 employees on the payroll who weren’t in loan sales, more than the 2,481 people on staff at the end of the second quarter but fewer than the 3,069 employees working for the company at the same point last year.
Flagstar operated 32 loan origination centers, the same as of June 30. Bank branch count was also unchanged at 106.
