Big Industry Changes Since Record 2003

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The mortgage sector is in new territory, one where interest rates sit at record lows and a refinance wave is building. While this year’s home-loan production has no chance of nearing the record set in 2003, it is interesting to look at how the metrics have changed since then.

The 2003 refinance Tsunami generated more than $3.8 billion in total residential production, including purchase transactions.

This year, home-loan fundings are projected to come in around $1.1 trillion. But that number could swell given the recent decline in mortgage rates.

Around two-thirds of business during 2003 was refinance. This year’s projections for refinance share are in the neighborhood of 56 percent — though that share has a good chance of escalating.

Government production in 2003 was 1.3 million loans for $162 billion, leaving market share at a meager 4 percent.

This year, the Federal Housing Administration predicts that it will endorse 1.5 million loans for $289 billion. That works out to a 26 percent market share.

Fannie Mae and Freddie Mac acquired around 57 percent of loan fundings in 2003. Based on issuance of mortgage-backed securities, last year’s GSE market share was two thirds.

Estimates of mortgage broker share ranged as high as 68 percent in 2003. Some of today’s estimates have broker-share at less than a quarter.

The three-biggest originators in 2003 were Wells Fargo & Co., with $470 billion in closings; Countrywide Financial Corp., where originations amounted to $435 billion; and Washington Mutual Inc. which reported $414 billion in business.

Only Wells Fargo remains in business.

Among sectors that no longer exist were subprime. In 2003, subprime originations came in at more than $300 billion, while the number doubled when including home-equity loans.

The biggest subprime lenders that year included New Century Financial Corp., National City Mortgage, Ameriquest Mortgage, Option One Mortgage Corp. and Fremont Investment and Loan — all of which are no longer in business.

Alt-A originations, which have also since disappeared, amounted to nearly $100 billion in 2003.

Overall delinquency of at least 30 days was less than 5 percent, while that number sits at more than 8 percent today.

In addition, less than 2 percent loans were in the process of foreclosure at the end of 2003. The foreclosure rate came in at more than 4 percent in the first quarter.

One of the most painful metrics is the number of people employed in real estate finance.

As of Dec. 31, 2003, the government reported that there were 439,800 people working in mortgage lending. The latest report has U.S. headcount in real estate finance at only 239,100.

Mortgage Expert

Mortgage Daily Staff



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