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Mortgage Originations Rise, Subprime Lending Grows

A trio of reports on mortgage production generally indicates growth. Even subprime originations have experienced an increase in closings.

During the final three months of last year, mortgage banking firms and financial institutions originated 1.60 million residential loans.

Lending activity slowed compared to the third quarter of last year, when home-loan production amounted to 1.88 million mortgages.

But activity picked up from 1.45 million loans funded in the fourth-quarter 2014.

The lending metrics were discussed in TransUnion’s Q1 2016 Industry Insights Report.

Vice President and Mortgage Business Leader Joe Mellman noted in the report that the year-over-year growth was a positive sign given the implementation of the TILA-RESPA integrated disclosures.

“It is heartening to see that, despite concerns that TRID implementation would negatively impact mortgage originations, we still observed growth at the end of 2015,” Mellman said. “We are well positioned for the spring home buying season, as lenders are more familiar with TRID requirements and strong employment and low interest rates continue.”

Average loan amounts on new originations were $220,050 in the fourth-quarter 2015,
rising from $206,197 a year earlier.

Another report from Equifax, US National Consumer Credit Trends Report: Originations, indicated that first-mortgage lending came to 590,000 loans for $140.6 billion during just January 2016.

First-mortgage production leapt from 430,000 loans for $99.8 billion the same month in 2015.

Subprime loans, those to borrowers with credit scores less than 620, accounted for 30,500 first mortgages with loan amounts totaling $5.4 billion.

A year prior, subprime production was only 20,000 loans for $3.0 billion.

The third report, from RealtyTrac, indicated that 1,415,511 loans for $444.560 billion secured by one- to four-unit properties were closed during the first quarter of this year.

Mortgage production was down 12 percent from the final-three months of last year based on loan count and off 8 percent from the first-three months of last year.

RealtyTrac derived its data from
950 counties that reportedly account for more than 80 percent of the U.S. population.

On a year-over-year basis, refinances were down 20 percent, while purchase financing rose 3 percent, according to RealtyTrac.

Lenders closed 48,700 closed-end home-equity loans
for $1.65 billion during January 2016, inching up from 46,300 HELs for $1.61 billion in January 2015, Equifax reported.

Subprime HEL volume was a meager 4,770 units for $0.103 billion, according to Equifax. Subprime HEL production was trimmed from 4,970 loans funded for $0.110 billion in January 2015.

Equifax reported that 95,500 home-equity lines of credit were originated for
$10.81 billion this past January. HELOC production increased from 88,400 units for $9.44 billion in the first-quarter 2015.

Subprime HELOC business made up just 1,340 lines for
$0.054 billion, though that was still modestly more than 1,340 lines for $0.049 billion one year prior.

RealtyTrac’s data indicate that first-quarter 2016 HELOC production was $95.273 billion.
HELOC production was up more than a third from three months earlier and 45 percent more than a year earlier.

RealtyTrac said the biggest HELOC originators were Bank of America Corp., with 24,033 lines opened in the first-quarter 2016; Wells Fargo & Co., where 18,513 HELOCs were opened; U.S. Bank, with 14,433 new lines; JPMorgan Chase & Co., which originated 9,349 HELOCs; and Citizens Bank, where 8,069 HELOCs were opened.

After that was PNC Bank’s 6,969 HELOCs, followed by TD Bank’s 4,284, then BB&T’s 4,245, KeyBank’s 2,817 and Boeing Employees Credit Union’s 2,567.

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