Despite a weak outlook, pockets of optimism emerged among mortgage bankers meeting this week in San Diego. But many are concerned about domination by the big three, while few rays of light are on the horizon for mortgage brokers.
Residential originations are projected by the Mortgage Bankers Association to reach $1.963 trillion this year then fall to $1.556 trillion during 2010. Last year’s production was $1.509 trillion.
The projected decline for 2010 is being driven by refinances — which are forecasted to fall to just $0.754 trillion from this year’s estimated $1.245 trillion.
MBA Chief Economist Jay Brinkmann said he expects that unemployment and delinquency — which tend to move together — will peak by next summer, while foreclosures are expected to top out by the end of 2010.
But, despite that tough times lie ahead, the atmosphere at the event was upbeat. Many attending executives from origination firms have seen production soar over the past year. At the same time, several technology service providers have been innovating at a rapid clip — adjusting to the paradigm shift in the industry over the past year.
Rob Carpenter, chief technology officer for Dorado, told MortgageDaily.com that he has seen many former executives of failed firms re-emerge with lean, new operations that are not saddled with legacy technology or bad loans. This new tier of lenders is competitively postured to take on the big financial institutions that have come to dominate originations.
Carpenter’s view was share by many others.
Some suggested that the big three — Bank of America Corp., JPMorgan Chase & Co. and Wells Fargo & Co. — are putting the squeeze on mid-tier players and making it harder to obtain warehouse financing. None saw this as a positive development.
Another common theme was doing more volume with less effort. A number of technology firms touted services that automate much of the loan process, and many have digitized more of the mortgage origination process.
The future of mortgage brokering was also a topic many attendees had an opinion about.
The dominant thinking was that broker share will continue to diminish, though small financial institutions will continue to feed the channel. Meanwhile, wholesale lenders who stay in the game are performing much more due diligence on the brokers themselves as well as on the individual loans.
In addition, the net branch model is shifting to mortgage banking from mortgage brokering.