12/12/2014
Tue Dec 9, 2014 14:20 PST
Independent mortgage originator licenses increase 10% over Q3 2013
The number of licenses issued for state-licensed mortgage loan originators increased 10 percent in the third quarter compared to 2013, while the number of federally registered loan originators declined, according to new data from the National Mortgage Licensing System & Registry (NMLS).
The increase in state licenses is an indication of a resurgent independent mortgage banking industry, with warehouse credit becoming more widely available and large depository banks shying away from certain types of lending due to caution about loan repurchases and new regulations.
In the third quarter, the NMLS measured 343,800 individual licenses, compared to 311,589 in third-quarter 2013. Meanwhile, the number of federally registered entities dropped 2.5 percent, from 404,385 in third-quarter 2013 to 393,981 in third-quarter 2014.
Bill Matthews, CEO of the State Regulatory Registry LLC, which runs NMLS, told Scotsman Guide News that the third-quarter license tallies are preliminary, but likely will not change when the agency issues a final third-quarter report in the coming weeks.
The number of state-registered mortgage originator licenses is not an indicator of the number of individual originators because originators can hold multiple licenses across several states.The uptick in state-registered licenses may indicate that nonbank lenders are expanding their territories.
David Lykken, president of Mortgage Banking Solutions, a mortgage bank advising company, said that independent mortgage companies are filling a space that, increasingly, large bank lenders are leaving.
“What we’re really seeing is the growth and reemergence of independent mortgage bankers and a surge in the broker community,” Lykken told Scotsman Guide News. “They’re the most agile group out there.”
Lykken reported that he attended a “crammed” regional Mortgage Bankers Association conference in New Jersey this past October, saying that he had “never [before] seen such activity” at a conference.
Independent mortgage bankers have become such a large part of the lending world that the Federal Housing Finance Agency (FHFA) warned in a report this past July that they could pose a threat to the government-sponsored enterprises (GSEs) because they are less regulated than big banks, and because of the increasingly large volume of mortgages they handle.
The same FHFA report said that 47 percent of mortgages Fannie Mae purchased in 2013 were from independent mortgage bankers, compared to 33 percent in 2011. Freddie Mac bought 20 percent of its mortgages from independents in 2013, up from 8 percent in 2011.
The GSEs have purchased so much from independents because big banks like Bank of America Corp. and JPMorgan Chase & Co. — whose CEO Jamie Dimon questioned earlier this year whether his bank would continue to originate Federal Housing Administration-backed loans — are pulling back from mortgage lending.
In November, Bank of America CEO Brian Moynihan said during a conference call, “You won’t see us start to expand our criteria much past what we’ve done today” in regard to expanding credit to more mortgage borrowers.
Lykken said that the rise of independent originators will continue as brokers pursue legitimate mini-correspondent models and with warehouse lines of credit becoming more readily available — but big banks will not stay away forever.
“The banks aren’t going away; they’re going to open their doors once they see what they’re missing,” he said.
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