The biggest decline in MI-insured business was in underwater mortgages that were refinanced while keeping their existing coverage under the Home Affordable Refinance Program.

Roughly 2 percent of depositories said they will cease offering mortgages altogether because of the Consumer Financial Protection Bureau’s ability to repay rule and QM standards.

Mortgage lenders are still smarting from a recent cyber-attack on their loan origination software provider, Ellie Mae, but a larger question now looms: If a company of Ellie’s stature was hacked, can it happen to other vendors as well? Tony Garritano, a consultant who manages a mortgage technology advocacy group called Progress in Lending, said, to the best of his knowledge, the attack on Ellie Mae is a first for the industry – and likely not the last. “As more lenders and their vendors migrate to the Internet this will happen again and again,” he said. He notes...

In general, many mortgage firms that make loans on vacation homes want a downpayment of at least 20 percent.

New York regulators want to know whether the additional costs will be passed onto consumers. Ellie Mae is not commenting.

Despite the results, four of the top 10 depositories sold more loans into the secondary market in 2013 than they did the year prior.

“Not only will FHA continue to go after the big banks, but they’re going after the mid-sized banks as well,” said Andrew Henscel, whose firm defends originators.

The nation’s banks and thrifts used a combined $406.1 billion in advances as of Dec. 31, 2013, up 26.7 percent from the third quarter and a 21.6 percent increase from the same period a year earlier.

Mortgage banking is an ugly business right now, but lenders are hoping that the first quarter will prove to be the nadir and that better times are ahead.

The only spurt of growth in the MBS market was in the non-agency sector, where new issuance was up 36.5 percent from the fourth quarter.