Lenders originated just $7.8 billion of second-lien mortgages in the third quarter, a 56% decline from a year earlier, according to new figures compiled by National Mortgage News.
The weak showing for second-lien production was in contrast to all residential originations, which increased by 31% in the third quarter, to $443 billion.
Many nondepository mortgage banking firms have stopped originating seconds entirely, while bank lenders have severely tightened underwriting standards on closed- and open-ended lines. Also, many seconds were once part of 80-10-10 structures, products that are now nearly extinct.
Wells Fargo & Co. ranked first among all second-lien lenders in the third quarter with fundings of $1.9 billion. Every lender among the top 10 showed a decline compared with a year earlier, ranging from 24% at Wells to 80% at JPMorgan Chase & Co.