PRESS RELEASE
Mortgage Correspondent Channel Contracts from MortgageDaily.com
DALLAS — (July 2, 2007) Despite a contraction in the correspondent lending sector, one financial giant is taking a bigger position, according to https://www.mortgagedaily.com — the dominant source of online news for the mortgage industry.
This type of secondary mortgage lending, which represents about one-third of residential originations, involves mortgage bankers who originate, fund and subsequently sell mortgage loans to correspondent lenders. Two of the biggest secondary buyers are Freddie Mac and Fannie Mae.
However, as the subprime market has seen turmoil this year, some lenders have abandoned the channel altogether.
Wells Fargo Home Mortgage said last week it terminated its correspondent alternative lending operations.
The mortgage behemoth said it is exploring alternative options for fulfilling the nonprime needs of correspondent clients, but will continue to serve the nonprime segment through its retail and wholesale channels.
Opteum Financial Services LLC in April abandoned its correspondent and wholesale origination channels because “the secondary market for mortgage loans has experienced significant distress and substantially increased volatility that was initially precipitated by lax underwriting standards, early payment defaults and high delinquency rates involving subprime mortgages and concerns over the general state of the U.S. housing market,” the company’s chairman and CEO said at the time.
That same month, HSBC Mortgage Services closed its correspondent acquisition channel, though future nonprime mortgage acquisitions will still be made by the corporate and investment banking side of the business.
A copy of a letter from a Wachovia senior vice president revealed it stopped taking new correspondent registrations in March.
“After a comprehensive strategic review, we have decided to exit the correspondent business,” he said in the letter.
And amongst those exiting the correspondent market last year were Washington Mutual and Aegis Mortgage Corp.
But Chase will soon expand its correspondent operations by adding a subprime flow process. The new process will expand the division’s bulk subprime program, according to Chase.
The addition will happen later this year and is part of a “plan to expand our mortgage businesses across the board,” a spokesman said.
Read complete secondary marketing news at https://www.mortgagedaily.com/SecondaryMarketing.asp
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Source: MortgageDaily.com
