Mortgage companies such as loanDepot, Fairway Independent Mortgage and United Wholesale Mortgage Solutions all reported that home mortgage originations rose by at least 27 percent in the first quarter of 2018 on a yearly basis, according to Attom Data Solutions.
Attom collected information from publicly recorded mortgages and deeds in more than 1,700 counties, accounting for more than 87 percent of the U.S. population.
United Wholesale Mortgage Solutions blew past Bank of America and became the fifth-largest mortgage originator in the U.S. with $6 billion in lending. The Michigan-based lender saw the biggest year-over-year gains in originations among the top 10 lenders, increasing 55 percent to 20,387 in the first quarter of this year. Fairway’s loan originations rose 28 percent to 14,655, and loanDepot is now the fourth-biggest loan originator, up 27 percent to 24,691.
As nonbanks gain market share, the country’s three biggest traditional banks all reported sharp declines in home mortgage lending, the report shows.
Wells Fargo’s mortgage originations declined 37 percent to 44,320 in the first quarter of 2018 compared to the previous year, while Bank of America originated 43 percent fewer home loans, down to 14,325. JP Morgan, the nation’s largest bank by assets, also reported a 21 percent drop in mortgage originations to 27,329 in the first quarter of 2018.
Since the financial crisis, banks have moved away from residential mortgage lending, citing low margins and increased regulatory scrutiny. In turn, nonbanks, or mortgage companies that are not subsidiaries of a bank or bank holding companies, began filling the void. With no overhead or legacy costs stemming from the financial crisis, these companies claimed they could originate mortgages at a lower cost to consumers than banks.
In many metro areas, including South Florida, nonbanks are now the leading mortgage lenders. But while some argue that the rise of nonbanks allows borrowers easier access to mortgages, others are critical that these companies aren’t under the same regulatory scrutiny as banks, and are concerned with their liquidity levels.
The report also highlighted other trends in the residential lending space.
Overall, residential mortgages originated in the first quarter fell 3 percent from a year ago to 1.8 million. This decline was largely due to a drop off in refinancings, which decreased 11 percent to just under 800,000.
In New York, total home loan originations declined 1 percent on a yearly basis to 79,972, while in Los Angeles it dropped 6 percent to 70,270. In Chicago, originations fell 8 percent to 50,109.
In South Florida, however, home loan originations rose 2 percent to 34,386.
Homeowners are turning to home equity lines of credit (HELOC) over refinancing due to interest rates increases and an acceleration of home price appreciation, Attom’s Daren Blomquist said in the report. HELOCs increased 14 percent annually in the first quarter.