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Q3 Mortgage Business Up, Market Share Slips at Biggest Lenders

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Market share was a little less concentrated at the top during the third quarter, according to mortgage lender ranking data compiled by Mortgage Daily. Business improved from the second quarter and looks likely to hold through yearend. The landscape for the largest mortgage servicers is undergoing a transformation.

Data collected by Mortgage Daily indicate that third-quarter residential originations were up more than 11 percent from the second quarter. That put third-quarter mortgage production at around $475 billion.

Behind the strength was energized business generated through the expanded Home Affordable Refinance Program — or HARP 2.0.

The mortgage statistics were obtained through a mortgage origination survey conducted by Mortgage Daily, filings with the Securities and Exchange Commission, and company news announcements. Mortgage Daily’s findings were based on origination data for 29 lenders that accounted for around 77 percent of the total estimated market.

The third-quarter number was determined by utilizing the survey’s 11 percent increase and average second-quarter origination estimates from the chief economists at Fannie Mae, Freddie Mac and the Mortgage Bankers Association. The trio estimated in October an average of $427 billion in home loan production by all U.S. lenders during the second quarter.

For the entire second half of 2012, the average forecast from the three economists was just $0.680 trillion as of July. But their collective outlook has improved considerably since, and their average second-half forecast has been raised to $1.009 trillion as of October.

Using historical data from the U.S. Mortgage Market Index report from Mortech Inc. and Mortgage Daily, it looks like the final quarter of 2012 might not be much different than the third quarter. The index, which reflects pricing inquiries for prospective borrowers, averaged 223 during the three months ended July 27 — an ending date used that syncs with third quarter production by allowing around 60 days of processing time before closing. During the three months ended Oct. 26, the index averaged 221 — pointing to fourth-quarter originations that are similar to third-quarter levels.

FHA loans accounted for about 13 percent of third-quarter originations. FHA share was a revised 14 percent in the second quarter.

Fannie Mae and Freddie Mac were responsible for around 74 percent of the latest quarterly activity, not much changed from the revised 73 percent share three months earlier. Revisions reflect the availability of more accurate estimates of previous production as more detailed data emerges.

Market share at the five biggest mortgage originators was 53 percent, a little less concentrated than the revised 54 percent share this elite group held in the second quarter.

While the five-biggest lenders maintained their second-quarter standings, all but Quicken Loans Inc. and Bank of America Corp. saw a decline in their market shares.

Biggest Mortgage Originators

Q3 2012
Lender Q3 2012
Q2 2012
Q3 Market
Q2 Market
1. Wells $139.0 $131.0 29.3% 30.7%
2. Chase $47.7 $44.3 10.0% 10.4%
3. USBank $21.5 $21.7 4.5% 5.1%
4. BofA $21.2 $18.9 4.5% 4.4%
5. Quicken $20.1 $13.9 4.2% 3.3%
6. Citigroup $14.5 $12.9 3.1% 3.0%
7. Flagstar $14.5 $12.5 3.1% 2.9%
8. PHH $14.4 $12.8 3.0% 3.0%
9. Provident $9.9 $7.3 2.1% 1.7%
10. BB&T $8.2 $8.0 1.7% 1.4%

PennyMac achieved an 87 percent increase in mortgage production from the second quarter — the biggest gain of any lender. Other big movers included Stonegate Mortgage, which improved by 76 percent; United Shore Financial Services, where business jumped 62 percent; and Quicken, which was up 45 percent.

Fifth Third, with a decline of 2 percent from the second quarter, had the worst performance of any lender tracked.

Compared to the third-quarter 2011, PennyMac had the biggest gain — with volume leaping to $6.31 billion in the most-recent period from $0.02 billion in the year-earlier period. The next biggest gainer was StoneGate, which had a 225 percent year-over-year improvement, then 203 percent at United Shore, 171 percent at Impac Mortgage Holdings Inc. and 139 percent at Quicken

The worst year-over-year record was at Ally, where business has declined 47 percent.

A shakeup in progress is likely to significantly alter the makeup of the biggest mortgage servicers.

Ocwen Financial Corp. is likely to move into a top-five spot with its impending acquisitions of Homeward Residential Holdings Inc. and mortgage assets from the Residential Capital LLC bankruptcy. Nationstar Mortgage Holdings Inc. and Walter Investment Management both indicated in earnings reports that they each have at least $0.5 trillion in servicing portfolios in the acquisition pipeline.

Potential servicing rights acquired by Ocwen, Nationstar and Walter could impact spots No. 4 through No. 6.

Biggest Mortgage Servicers

Rank Servicer Portfolio Size
as of Sept. 30
($ billions)
1. Wells Fargo $1,879.0
2. BofA $1,475.7
3. Chase $1,056.1
4. Citigroup $471.9
5. USBank $270.3
6. ResCap $200.0
7. Nationstar $197.8
8. PHH $185.1
9. PNC $170.3
10. SunTrust $149.7

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