Mortgages with low credit scores and higher loan-to-value ratios accounted for a larger share of Fannie/Freddie purchase business in the first quarter. But the industry is hardly in a race to the bottom despite slumping volume and tight margins.
Many lenders still rely on the "natural hedge" that balances gains on the production side against losses on servicing, but timing is an issue. Retention may be the best hedge of all.
A group of 22 banks reported a combined $1.84 billion in mortgage banking income for the first three months of 2019, a solid improvement from the fourth quarter but down from the same period last year.
Quicken Loans and United Shore Financial Services ranked as the top two agency MBS producers in April, dumping the market's long-time leader, Wells Fargo, into third. The megabank still ranked number one on a year-to-date basis.
The mortgage servicing business is seeing growing consolidation, especially in the second tier of market participants. Mergers, MSR sales and subservicing continue to reshape the market.