Posts Tagged ‘Urban Financial’
The first month of 2011 brought us back to a familiar theme from last year as broker/wholesale endorsements outpaced retail in a down month for the industry overall. We saw this pattern several times last year, particularly as the industry volume growth tapered off in September and October.
- Broker/Wholesale endorsements for January came in at 2,413 units, up 9.3% from December but down 45.8% from a year ago
- Retail endorsements totaled 4,049 units, down 6.8% from last month but up 27.7% from last year
- Brokers contributed 37.3% of all units, up from 33.7% last month but down from 58.4% a year ago
The divergence between channels is particularly striking this month because Retail was entirely responsible for the industry decline. It’s way too early to attribute the weakness to BofA’s exit (we won’t see that effect until at least March or more likely April endorsements, so we can probably expect some bounce-back from Retail in February results if our client conversations are any indication.
Indeed, BofA has had its two best endorsement months since February 2010 as the chart below illustrates.
What’s most interesting is that broker/wholesale business has grown very little from the lowest levels in last years for BofA, while retail has recovered with the rest of industry. We’ve heard from several people in the industry that this directly related to the decision not to pursue certain types of broker/wholesale business, and whatever the cause the effect has been clear on this chart.
There was a wide divergence among other top 10 lenders in January, as Genworth and Urban both saw strong recoveries from what now look like hiccups in December, while Financial Freedom had the most notable decline to a multi-year low.
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As we saw last month, the downtrend in application numbers is finally starting to significantly impact endorsement numbers. That trend has continued in April, with overall industry numbers down to 5,511 units, dropping 5.3% from March.
Thankfully (if you’re among the survivors), there was an even greater decline in active lenders (down 7%) that translates to an almost imperceptible uptick in average loans per lender. It’s nothing to write home about, but at least it’s helping keep some heads above the water.
- Several regions saw modest volume increases in April, including the Mid Atlantic region that includes Baltimore. If you missed our prior newsletters about what’s occurring in the Orioles’ city and what might be driving the numbers, check out our prior pieces here and here)
- Midwest and Great Plains also showed strength, but their relatively low volumes couldn’t make up for significant declines in Pacific/Hawaii and NY/NJ
- Pacific/Hawaii in particular is struggling, as volume has dropped 44% since December
- Of all 82 metros we track, just 2 show positive volume growth year to date vs. last year: Houston and New Orleans. We’ve talked about the relative strength in Texas before, and perhaps New Orleans is simply doing its best to welcome all of us to town for NRMLA’s annual convention later this year…
The story is similarly stark (and no that’s not an Iron Man 2 reference, even though we are excited to see the movie next week) among lenders, as you might expect given the broad industry decline in recent months. On a year to date basis, only 2 of the top 10 lenders show positive volume growth:
- Urban Financial (recently purchased by Knight Capital) saw retail volume grow 48%, perhaps benefiting from relative strength in the Midwest where they’re based, despite their top volume state continuing to be Florida
- Genworth is seeing positive trends in their retail business, up 41% vs. 2009
The full report is available by clicking the image below. Enjoy!
There’s a new sheriff in town, and that sheriff is Generation Mortgage. Ok, that may be a little extreme, but on an endorsement volume basis we saw Generation take the lead on the wholesale side of the business in February, with 831 loans endorsed during the month. This is a major improvement over where they were in the second half of 2009, where they were a little late in getting a competitive fixed rate product to market. With over 70% of the reverse mortgage business being fixed rate product in the latter portion of the year, not having it proved costly. However, it appears they have fixed that, and in a big way. However, before we anoint them as the new kings of the wholesale biz, it’s worth a wait of a few months to see if the performance is consistently good, or if there was some catching up in endorsements from prior periods.
Genworth also gained in February with a more attractive fixed rate product offering to underline the point, although they saw less pickup than Generation. Rounding out the trio of higher performers this month is Urban, recently bought by Knight Capital Group. Their wholesale volume of 653 units put them in 3rd place for the month, behind Generation and Bank of America.
What are some other trends to point out for February?
- Wholesale endorsement volume dropped 12.6%, vs a 1.5% decline in Direct Endorsements. One month does not a trend make, particularly since this still leaves broker/wholesale activity considerably above direct retail lending given the better figures in Dec & Jan, although we’ll continue to watch closely for signs of a trend given that the current environment seems tilted toward direct retail lenders right now.
- Another way to look at whether big lenders are faring better than small is the combined market share of top 10 lenders. On that score, we’re getting early indications that the big are getting bigger as a full 92.5% of all volume in February went through either retail or wholesale channels at the top 10. That may not surprise anyone who has been in the business a while, but it underlines the point that smaller volumes point to more concentration as smaller players exit the business.
- February proved a volatile month for lenders’ combined endorsement volumes, with 7 of the top 9 lenders (excluding WAF) having moves of 30% or more up/down.
- Wells Fargo and Bank of America saw relatively steady volumes, up 11% and down 12% respectively
- Generation, Urban and Genworth were the winners as outlined above, each up 36-88%
- The remaining lenders saw declines ranging from 40-47%
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