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Flagstar Reduces Size of Mortgage Business

Residential loan production declined at Flagstar Bancorp Inc. as mortgage assets were reduced and mortgage staffing was trimmed. While the servicing portfolio expanded, it was still far leaner than a year ago.

During the first three months of this year, Flagstar originated $4.867 billion in mortgages, according to its first-quarter earnings report.

Business tumbled from the previous three-month period, when $6.439 billion in first and second mortgages were closed.

Loan production has plummeted from the same quarter in 2013, when $12.423 billion in residential loans were originated.

The last time Flagstar’s production was this low was in the second-quarter 2011, when just $4.6 billion was funded.

“In a very challenging mortgage environment, we were able to maintain our market share and at the same time increase our gain on sale income,” Flagstar Chief Executive Officer Sandro DiNello said in the report.

Fallout-adjusted mortgage rate lock commitments declined to $4.9 billion in the first quarter from $5.3 billion in the previous period — pointing to further slowing during the current period.

Flagstar said it serviced 174,411 loans for $33.480 billion as of the end of last month.

The residential loan servicing portfolio increased from 159,482 mortgages for $30.118 billion as of Dec. 31, 2013. But the portfolio has plunged from for $78.648 billion as of March 31, 2013.

Last month’s total included $28.999 billion in mortgages serviced for others.

Residential assets closed out the first quarter at $2.787 billion. Flagstar cut this asset class from $2.968 billion at the end of last year and $3.272 billion at the same point in 2013.

Last month’s mortgage assets included $2.349 billion in first mortgages, $0.165 billion in second mortgages and $0.273 billion in home–equity lines of credit.

Warehouse lending assets slipped to $409 million from $424 million and tumbled from $751 million at the end of the first-quarter 2013.

Commercial real estate loans on the books grew to $0.513 billion from $0.409 billion but were off from $0.563 billion as of March 31, 2013.

At Flagstar Bancorp, there was a $118 million first-quarter loss before income taxes, not as bad as the $248 million fourth-quarter 2013 loss. Earnings swung from a $24 million profit one year earlier.

Flagstar employed 315 loan officers and account executives, reducing its ranks from 359 at the end of last year and 322 one year prior.

Across all of Flagstar, staffing closed out the first quarter at 2,798. Headcount was cut from 3,253 three months earlier and 3,778 twelve months earlier.

The number of loan origination centers was 33, down six from Dec. 31.

Bank branch count was down by five to 106.

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