Mortgage Originations and Pre-Season Polls

Mortgage Originations and Pre-Season Polls

2nd Quarter 2014 Originations –Top 10 Lenders (in billions)

• Lender Q2 2014 Q1 2014 Q2 2013

• U.S. Total (est.) $295.5 $237.7 $556.3

• Wells Fargo $47.0 $36.0 $112.0

• JPMorgan Chase $17.6 $17.7 $49.5

• BofA $13.7 $10.8 $26.8

• Quicken $13.1 $11.2 $23.8

• U.S. Bank $11.6 $9.3 $23.9

• PHH Mortgage $9.3 $7.4 $14.8

• PennyMac $7.4 $5.1 $8.9

• Citi $6.2 $5.2 $17.2

• Flagstar $6.0 $4.9 $10.9

• BB&T $4.7 $3.8 $9.3

Now looking at these numbers courtesy of Mortgage Daily, it makes me wonder how we have so many Mortgage Companies claim to be a top 10 lender. Top 10 in what, and by what measure?

Being that College Football is about to kick off and we have numerous preseason polls, it kind of reminds me to look at the folly of those polls, as not one game has been played, the personnel on the field has gone through changes and some coaching staffs have changed, so how do you truly know which team is better than another? Let them play ball before all of the predictions are published and this is coming from a Defending Champ FSU fan (me).

At least with the above numbers they are based on results not some corporate spin doctor or advertising department. The death of the large mortgage originator is as much a myth as all these so called Top Ten Lenders, I constantly see in the trade publications. Breaking down the numbers for perspective, Wells Fargo originated more volume in the 2nd quarter than #2 JPMC, #3 BofA and #4 Quicken combined by 47 BB verse 44.4 BB. Or another way to look at it, Wells did more volume than the combined volume of #5 thru #10 added together by 47 BB verse 45.2 BB. And taking it one more step, the #2 thru #4 lenders almost matches what the next 6 lenders did combine. The 10-biggest lenders accounted for 46 percent of industry originations. So the other 54% is originated by the other 100s of lenders in the industry. The myth of the dying large lender is over stated by trade publication that needs to sell their magazines to those smaller lenders.

So with the industry being a 1 trillion dollar marketplace for the foreseeable future, I suggest you read below the headlines and examine the data. The cost to originate a loan is continuing on an upward trajectory, margins are as compressed as they have been in the last 7 years, the threat of regulatory violation is at an all time high and mortgage companies that were created and started after 2007 you have to ask yourself were they built for this new normal. Will they truly be able to continue to pay over 100 basis points as they become more and more compliant? Pull thru rates are increasing for all companies due to lower volume, service levels are moving closer and closer for all competitors and all companies are at least considering the Non Q sandbox to play in. What is important to you as an individual originator? Is it the Pre-Season Poll or is it the Final Poll in January? For me it is the latter, Go Seminoles!!!