Decoding Compliance

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the latest S e c on da r y M a r k e t a na ly t ic s se r v ic i ng or ig i nat ion ORIGINATION Buyers Remorse, Origination Sellers Rejoice Frustrated potential buyers are feeling the sting of a dream deferred as the market begins to correct itself. P rospective homebuyers are starting to feel stung as the market slips away from them, according to responses in Redfin's latest Real-Time Home-Buyer Tracker. The survey shows a shortage of inventory and rising prices— both of which naturally benefit sellers—are creating frustration for buyers trying to get in on the ground floor of the housing recovery. According to Redfin's findings, 79 percent of buyers who responded to the survey now believe home prices will increase in their neighborhood during the next year, up from 71 percent in Q 4 2012. The share of buyers who believe prices will rise "a lot" more than doubled, increasing to 22 percent from 10 percent previously. Forty percent of buyers said the trend of rising prices is a concern for them, up from 33 percent last quarter. At the same time, 66 percent of buyers listed low inventory as a major concern in 2013's first quarter, up from 59 percent in the fourth quarter. When asked what has surprised them most about their local real estate market, 38 percent of respondents mentioned a lack of inventory. Given the situation, it seems buyers are now understanding how much of an advantage sellers currently have. Only 40 percent of buyers believe now is a good time to buy in their neighborhood, down quarterover-quarter from 48 percent. Meanwhile, 48 percent say it is a good time to sell, up from 27 percent before. 40 | The M Report These concerns are driving buyers to change their purchase plans, said Redfin blogger Tim Ellis. "In response to the one-two punch of rising prices and tight inventory, more buyers are expanding their home search to new areas they haven't considered before," Ellis wrote on the company's blog. "More buyers are increasing their budgets, as well. Thirtyfour percent of respondents said they were 'ready to pay more,' up from 26 percent last quarter." Low interest rates were still the driving force behind most buyers' current market presence; 58 percent selected that choice as the reason they want to buy now. Rising prices are also a factor, with 40 percent saying that is one of the reasons they're currently in the market to purchase (up from 33 percent in last year's fourth quarter). While prospective buyers are clearly frustrated by the current market, most are still willing to keep trying. According to Redfin, the percentage of buyers who are "taking a break" dropped to 32 percent in the first quarter, down 6 percentage points from the last. "Buyers are feeling the pinch and few are backing down. With expectations set for even more price increases in the coming year, anyone thinking of getting into the market as a buyer in the coming months should expect to encounter an intense market, where sellers have a clear upper hand," Ellis wrote." Volumes End 2012 Strong Production volume climbed 30 percent at the end of the year, according to Mortgage Daily. M ortgage origination volume continued to climb in 2012, according to data from Mortgage Daily's 2012 Mortgage Lender Ranking. According to data collected from surveys, earnings filings, and other public disclosures, loan volume across all lending firms grew 30 percent annually in 2012. In the fourth quarter alone, Mortgage Daily reports residential originations coming in around 3 percent above third-quarter volume. Year-over-year, Q 4 saw mortgage production grow 17 percent. While production was up last quarter, data from Mortgage Daily's and Optimal Blue's U.S. Mortgage Market Index suggests originations during the first quarter of 2013 are on track to fall 16 percent quarter-over-quarter. In terms of production volume, Wells Fargo continued to dominate the market in Q 4, reporting $125 billion in loans during the quarter (representing 23 percent of market share). It was followed by Chase ($51.6 billion for 10 percent of the market) and Quicken Loans ($25.1 billion, or 5 percent market share), which climbed from the No. 5 position in the third quarter. Bank of America (BofA) and U.S. Bank rounded out the top five positions, each taking 4 percent of the market. The top five list for all of 2012 looked similar, though some of the positions are changed: Wells Fargo remained No. 1 with $524 in volume last year (28 percent market share), followed by Chase ($182.2 billion, 10 percent share); U.S. Bank ($84.5 billion, 4 percent share); BofA ($78.7 billion, 4 percent share); and Quicken ($70 billion, 4 percent share). According to Mortgage Daily, the Federal Housing Administration (FHA) insured about $242 billion in loans last year, while the Department of Veterans Affairs (VA) insured an estimated $128 billion, bringing government share of the mortgage market to around 20 percent. Meanwhile, Fannie Mae and Freddie Mac together financed about 73 percent of 2012 originations. Wells Fargo also dominated on the servicing side with an estimated portfolio size of $1.9 trillion. BofA held second place with a $1.4 trillion portfolio, followed by Chase ($1.1 trillion), Citi ($411.9 billion), and U.S. Bank ($276.4 billion). Ocwen and Nationstar, two companies that have shown a large appetite for servicing rights as of late, nearly doubled their volume last year. They ranked in the top 10 list at Nos. 6 and 7 with estimated portfolios of $204 billion and $203 billion, respectively.

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