Increased 2005 Production Expected by Community Bankers

Nearly half of community banks expect their single-family mortgage volume to increase from 2004, while only 21% forecast a shrinkage, according to America’s Community Bankers’ 12th Annual Real Estate Lending Survey.

The survey reportedly compiled the responses of 553 small-and medium-sized banks nationwide. The questionnaire was mailed to the banks in the fourth quarter and requested information as of Sept. 30, 2004.

Optimism in the sector contrasts the fallout expected for mortgage lenders as a whole: Projected industry production for 2005 is $2.5 trillion, according to the Mortgage Bankers Association, off from $2.9 trillion last year.

A majority of the bankers anticipate higher home equity volume than in 2004.

The responses reportedly showed that the share of fixed-rate mortgage production decreased last year to 70% from 79% in 2003, while ARM share jumped to 30% from 21%.

As a percentage of originations, loans sold in the secondary market decreased from half in 2003 to 43%. Banks lowered the percentage of loans they sold to Fannie Mae and Freddie Mac from 32% to 18% last year, while they increased the percentage of loans sold to conduits/wholesalears, the Federal Home Loan Banks and other financial institutions from 15% to 24%, according to the announcement.

Respondents said the most often used conduits were Washington Mutual, Countywide, CitiMortgage, ABN AMRO, Chase Manhattan and Wells Fargo.

The survey also found that the use of underwriting and origination technology has stabilized, as 66% of the lenders reported using automated underwriting systems and automated originations technology, and two-thirds of these respondents linked them together.

About three-quarters of the banks said they offered general mortgage-related information on the Internet, an improvement from only 57% in 2003. More than half, or 52%, of the respondents provide mortgage rate and production information, 21% accept applications online and 9% give an approval or rejection online, the ABC reported.