The nation's five largest funders of home mortgages — four of which fall into the megabank category — had a blowout fourth quarter in terms of residential originations, posting gains of 35% or better, with one glaring exception: Bank of America.
B of A, which ranked second overall in production, originated $85 billion, a decent showing, but a 4% drop compared with last year.
The funding decline comes three months after B of A announced its departure from the wholesale channel, a line of business that accounted for just 7% of its total fundings in the third quarter.
Although B of A executives declined to talk about the bank's mortgage strategy, officials from other firms that both compete and partner with it (as correspondents) said they believe B of A may be in for a long, slow slide in its residential finance, a business that includes the once-dominant Countrywide Financial Corp. franchise.
Also, B of A's departure from the wholesale channel is benefiting other players that have scooped up wholesale account executives it laid off.
Bill Ashmore, the president of Impac Mortgage Holdings of Irvine, Calif., said half of the 10 or so AEs he recently hired came from B of A.
Meanwhile, B of A remains strong in correspondent lending where it ranks first nationwide. (The channel accounts for about half of its production.)
B of A also ranks first among warehouse providers, lending heavily to the very same correspondents that it buys closed mortgages from.
As for the full year, Wells Fargo & Co. ranked first nationwide in new originations, producing $389 billion in home mortgages, with B of A second at $304 billion. (Figures are preliminary based on reports compiled by National Mortgage News and the Quarterly Data Report.)
Wells had a strong fourth quarter with originations rising 35% compared with a year earlier. But other top-ranked lenders performed even better.
Citigroup, which a year ago de-emphasized mortgage lending, doubled its production to $22 billion during the quarter. JPMorgan Chase had a 55% jump in fundings.
Residential Capital Corp., a subsidiary of Ally Financial, increased originations by 38%. (Ally, majority owned by the U.S. government, hopes to go public this year.)
But what do all these top five originators have in common? They also happen to be the five largest correspondent buyers as well.
And most have warehouse departments that fund the very same nonbanks that are upstreaming product to them.
