The Mortgage Bankers Association has begun using Home Mortgage Disclosure Act data to rank subprime originators.
Douglas G. Duncan, the trade group's senior vice president of research and business development and its chief economist, said that the subprime lending market "has become a significant matter of public discussion." The rankings, which will be released annually, are one way the MBA can "participate in that discussion," he said in an interview Tuesday.
According to Mr. Duncan, the group used a list of subprime lenders established by the Department of Housing and Urban Development to determine which lenders to include in its report.
One caveat: HMDA data "can't identify the terms of an individual loan," Mr. Duncan said. "It doesn't give you anything on interest rates, fees, or loan type." As a result, each company's originations total includes some loans that would not fit the subprime category. However, he said that 95% of each lender's loans are subprime.
There is also a lag because the HMDA figures come out in April each year.
MBA released its 2003 rankings Monday. At the top of the list was New Century Financial Corp. of Irvine, Calif., which made 146,007 loans for $23.9 billion last year, representing 8.7% of the subprime market, according to the MBA. Last month New Century raised about $783 million in an initial public offering after becoming a real estate investment trust.
Second was National City Corp. of Cleveland, which includes First Franklin Financial Corp., making $19.8 billion of loans, or 7.2% of the market.
Ameriquest Mortgage Co. of Orange, Calif., was third, with $18.9 billion of originations, or a 6.9% market share. Option One Mortgage Corp. of Irvine was fourth, with about $18 billion of originations, or a 6.5% share.
National City came in first in purchase originations, with about $13.7 billion, or 16.4% of subprime purchase loans. New Century had 7.8% of the subprime purchase market, with about $6.5 billion, while Option One had about a 5.8% share, with $4.8 billion.
Surprisingly, two heavyweights - Citigroup Inc. and HSBC Holdings PLC - did not make the top five of the overall subprime origination list.
Citi came in seventh, with about $10 billion of originations, or a 3.7% market share. Two HSBC units, Household Finance Corp. and Beneficial Corp., were listed separately, but their combined figures ($10.44 billion of originations, or a 3.8% share) would have put HSBC just past Citi at seventh.
The report also ranks subprime lenders at the state level. According to the MBA, the figures cover more than 8,100 financial institutions and more than 34 million loans.
