Industry Trends – December 2009

In any other circumstance, we wouldn’t be bidding a fond farewell to 2009 since it was the first decline in overall industry volume in recent memory.  However, in light of what is shaping up to be a significantly tougher 2010, we’re almost nostalgic about the year just ended.

Here’s an update on our running application trend chart to illustrate what we’re looking at for 2010 omens.  The only thing that could be more disturbing than the slow recovery we saw in November and December is the double dip back down in January.  Apps were all the way back down to 5,805, below even October’s reading of 5,892.

AppTrends

If you’re looking for good news, we are finally hearing optimistic anecdotes from many of our clients about activity levels picking back up in February.  Of course, we’re also hearing a lot of examples of small reverse brokers who are opting out of the new licensing tests and either fleeing the industry entirely as the volume declines or joining up with larger firms where licensing (and corporate profitability) is someone else’s problem.  And of course, there are plenty of federal bank subsidiaries out there that are marketing their exclusion from individual loan officer licensing pretty heavily these days…

Connecting the dots, we can see from this month’s report that the number of lenders dropped 11% in December.  We suspect that many of those that are jumping out of the business are likely in areas like San Bernardino/Riverside/Fresno in California, Las Vegas, NV and Miami, FL where penetration is highest and home price declines have been most severe, as areas with these characteristics continue to see steep declines in loan volumes.

?Penetration Rank by Geographic Area
Rank State Penetration Rank City State Penetration
1 DC 7.3 % 1 Opa Locka FL 17.0 %
2 NV 3.9 % 2 Compton CA 14.1 %
3 CA 3.8 % 3 Hialeah FL 12.0 %
4 MD 3.7 % 4 Apple Valley CA 8.9 %
5 UT 3.7 % 5 Hesperia CA 8.9 %
6 OR 3.4 % 6 Sun City CA 8.7 %
7 CO 3.3 % 7 Moreno Valley CA 8.4 %
8 FL 3.2 % 8 Portsmouth VA 8.1 %
9 CT 3.0 % 9 Detroit MI 8.0 %
10 AZ 2.9 % 10 Miami FL 7.9 %

Penetration Rankings

Take a look at the flip side of this trend though, and we can see that many of the higher value urban areas are seeing large increases in activity as the loan limit increases continue to work their way through.  Lenders that want to survive are learning to adapt to where the business is today, getting much more local than ever before.

MCA Growth Rankings

Of course, if you’ve been reading this report for a while you already know all this.  For our new readers, you can find these facts on page 2 of the report below and plenty more food for thought as well.

Click the image below for this month’s Industry Trends report.

Industry Trends - December 2009