Home News Lessons from lenders’ Q1 earnings amid epic volume drop

Lessons from lenders’ Q1 earnings amid epic volume drop

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UWM’s first-quarter revenues were driven by an increase in MSR’s fair value of $ 172 million. UWM’s MSR outstanding principal balance was $ 303.4 billion as of March 31, 2022, but just a year ago it was $ 221 billion.

Revenue from the sale of MSR, a rocket company based in Detroit, its parent company Rocket mortgage, The total value for the first quarter of 2022 was $ 254 million, up from $ 10.2 million in the same period in 2021.

Rocket posted $ 546 billion in outstanding principal balances for its service books as of March 31, up 17% year-on-year. According to the company, Rocket has 2.6 million customers in its service portfolio and generates $ 1.4 billion in service revenue annually.

Homepoint has shrunk its service portfolio and completed the sale of MSR for a single-family mortgage of approximately $ 434.5 million in the first three months of 2022. $ 74.4 million from 2021 and the previous quarter.

Other companies that have achieved a profitable first quarter by relying on their service portfolio include non-bank lenders based in California. Penny Mac ($ 173.6 million), non-bank mortgage lenders and servicers New Residential Investment Corporation. ($ 690 million), Mr. Cooper ($ 658 million) and Okwen ($ 58 million).

Without abundant refis, lenders are also tasked with increasing the amount of mortgages they buy. Mortgage executives, consultants and loan officers Works well with purchased mortgages – In other words, approaching the borrower – is in a better position in the downmarket.

Rocket posted a $ 54 billion closed loan from January to March, down from $ 75.8 billion in the previous quarter and $ 103.5 billion in 2021. The company’s purchases increased 43% year-on-year, but only 16.7% of the total creditor mix last year. ..

“I am very confident in our ability to grow our purchases organically,” said Jay Ferner, Vice Chairman and Chief Executive Officer of Rocket Companies, in a statement. “That said, there are opportunities that may allow us to devote ourselves to the buying market.”

According to analysts, Rocket does most of its business through direct retail to consumers and is also the second largest lender in wholesale, so it has advantages in the buying market. Rocket reportedly generated about $ 113.5 billion in broker channels last year. Inside mortgage finance.

UWM created a $ 38.8 billion mortgage in the first quarter of 2022. This was a 29.7% decrease from the previous quarter and a 20.8% decrease from the previous year. Purchase loans increased 56% of total origins in the first quarter of 2022 to $ 1.9 billion, up from 24.9% in the same period last year.

Refi-heavy Loandepot I had a tough 3 months to report Net loss of $ 91.3 million In the first quarter; the rest of 2022 is expected to be in the red.

Loan composition fell 26% from the previous quarter to $ 21.6 billion, and the company’s market share fell to 3.1%. According to the company, lower rate locks and margins on sales were responsible for the significant quarterly decline.

“The rise in mortgage rates during the quarter happened much faster and more rapidly than everyone expected when the quarter began, and the rate of return fell sharply and rapidly,” said LoanDepot’s founder and founder. Executive Chairman Anthony Hsieh told analysts.

Rate locks for the first three months of 2022 were $ 30 billion, down 13.7% from $ 34.8 billion in the previous quarter. Margin on sale fell from 2.23% in the previous quarter to 1.96% in the first quarter.

The company’s $ 68.4 million net loss due to fluctuations in the fair value of servicing rights did not contribute to Q1 results. The outstanding principal balance of the service portfolio decreased from $ 162 billion in the previous quarter of 2021 to $ 153 billion in the first quarter of this year.

Two of the largest banks in the country, JPMorgan Chase When Wells Fargo and Company.Reported double-digit declines in origination volume and net income, but were partially offset by the good performance of their respective service portfolios.

Wells Fargo, the 4th largest US mortgage lender in volume, occurrence The $ 37.9 billion in the first quarter of 2022 was down 21% quarterly, down 27% year-on-year. The refinancing share fell from 64% in the first quarter of 2021 to 56% in the same period this year.

JP Morgan, the fifth largest mortgage lender in the country, totaled $ 24.7 billion in origins from January to March, down 41% from the previous quarter and compared to the first quarter of 2021. And it decreased by 37%.

“The mortgage origination market has experienced one of the largest. Quarterly decline Remember, it will take time for the industry to reduce its surplus capacity, “Wells Fargo CEO Charlie Schaff said at a financial results briefing.

Both banks saw a 20% decline in mortgage revenue, but an increase in service revenue offset the decline in origination revenue. Wells Fargo’s mortgage servicing rights increased 13% from $ 7.5 billion to $ 8.5 billion in the first quarter of 2022. JP Morgan’s service rights increased from $ 4.4 billion in the year-ago quarter to $ 7.2 billion in the first quarter of 2022.

Headcount reductions were inevitable for some lenders to manage their business during the storm.

American corporate finances, Reported a loss of $ 64 million in the first quarter. Reduced 598 jobs From March 2021 to March 2022. No specific details have been announced as refis is expected to decline further in the second quarter, but personnel will be maintained in line with trading volume.

Penny Mac Announcement of layoff Of the 236 employees in six California offices in March. Most of the reduced positions were mortgage professionals, including refinancing specialists.

The layoff was also imminent at loanDepot, but no details were provided regarding the affected timelines or positions.

Patrick Flanagan, Chief Financial Officer of LoanDepot, said: “We look forward to achieving this goal by further reducing marketing and labor costs by adding headcount reductions,” added Flanagan.

Surviving the slump in the sound-cycle industry also meant that lenders could roll out new products and services.

In the third quarter of this year, loanDepot will roll out a new Home Equity Credit Line (HELOC) product that customers can apply for and approve in just seven days. This product is located within the Melo Business Unit, which was launched in 2017 and operates in parallel with loanDepot’s mortgage formation and services division.

January, loanDepot Federal Housing Management, Department of Veterans Affairs When United States Department of Agriculture-Funding Genie Maylone In-house. The move “takes advantage of continued investment in the company’s service platform, allowing the company to scale as it improves operational efficiency and customer service,” said a LoanDepot executive at the time.

FoA is diversifying its portfolio beyond traditional mortgage products that perform best in reverse origins this quarter. Product funding increased 12% from $ 1.32 billion in the fourth quarter of 2021 to $ 1.47 billion in the first quarter of 2022. Compared to the same period in 2021, when the volume was $ 769 million, it increased by 92%.

“Our reverse origination and commercial origination business faced pressure in the first quarter as rates and spreads rose at the fastest pace in decades, but the reverse origination and commercial origination pipeline. Is still strong, “said Patti Cook, CEO of FoA. “The rise in home prices over the last few years has made our reverse pipeline bigger than ever.”

The pandemic has brought a banner year to the mortgage industry. It is said that it started trading more than $ 4.3 trillion in 2020 and more than $ 4.4 trillion in 2021. Black Knight.. Purchase lending hit a record high of $ 1.7 trillion in 2021, while refinancing lending of $ 2.7 trillion was below 2020 levels.

Correction: This article has been updated to reflect the rate of increase in UWM purchase loans. From 2021.

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