Setting The Stage

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34 | Th e M Rep o RT o r i g i nat i o n s e r v i c i n g a na ly t i c s s e c o n da r y M a r k e t ORIGINATION LocaL Edition Borrower Health improving The end of The year shows improving borrower condiTions, wiTh The naTion's capiTal leading Them. WASHINGTON, D.C. // After dropping slightly in the third quarter, borrower health bounced back to end 2013 on a high note, according to LendingTree. Compared to the prior period, the nation's average Borrower Health Score was up 2.8 percent to 82.2, rebounding from the third quarter's 1.6-point drop. The Borrower Health Score is calculated using the weighted av- erage of credit score, loan-to-value ratio (LTV), and overall "lendabil- ity" of loan seekers in each state throughout the quarter. According to LendingTree's measures, the average credit score for all prospective bor- rowers in the United States in Q 4 was 635, one point lower than in Q 3. That slight drop in health was offset by a decline in the average borrower LTV to 88.6 percent, a decrease of a little more than a percentage point. Meanwhile, the average loan amount rose nearly $3,750 to $168,747. "Lenders are slightly more motivated to increase lending to homebuyers as refinanc- ing activity drops," said Doug Lebda, founder and CEO of LendingTree. "Borrowers still need to meet underwriting requirements, but for potential borrowers with less than perfect credit, there might be oppor- tunities available to help them become homeowners." Looking at local data, the healthiest "state" in the country in Q 4 was actually not even a state: The District of Columbia beat all others with a health score of 97.9, based on an aver- age credit score of 677 and an LTV of 86.2 percent. Following the nation's capital were Hawaii (with a health score of 92.7), New Jersey (92.6), California (92.4), and Utah (91.7). The bottom states in terms of borrower health were concen- trated in the South and Midwest, with West Virginia ranking 51 with a score of 69.6. It was followed closely by Mississippi (69.9), Alabama (71.6), Indiana (73.2), and Arkansas (73.5). JPMorgan Plans to lose resources By year's end The bank plans To cuT an addiTional 6,000 jobs in 2014. NEW YORK // JPMorgan Chase announced it plans to cut an ad- ditional 6,000 mortgage banking jobs in 2014 as the bank adapts to a continued spiral in loan demand. The announced cuts come on top of an estimated headcount reduction of 11,000 last year, the bank revealed in an inves- tor presentation. At this time in 2013, JPMorgan was shooting to bring the headcount down at its mortgage wing by 13,000–15,000 over the following two years. Also set for the chopping block are about 2,000 jobs in consumer banking and other services. Altogether, the mega- bank expects to have approxi- mately 260,000 in its employ at the end of the year. The cuts are a necessary part of JPMorgan's efforts to bring down expenses, which it plans to trim by about $2 billion in 2014 in its mortgage banking unit alone as origination costs rise and consumers show dimin- ished interest in borrowing. "Despite all the challenges and complexities, we are committed to being in the mortgage business and will adjust our business model to be successful over the long-run," the bank said in its presentation. Mortgage banking contributed about $3.1 billion to JPMorgan's income over 2013, down from $3.3 billion in 2012, thanks to the year's slower second half. JPMorgan isn't the only major bank reducing staff to cut costs. It was reported earlier that same month that Bank of America is bringing its own headcount down, and Wells Fargo an- nounced several cuts toward the end of 2013. Fifth third exits Wholesale space company Turning iTs focus To oTher aims of iTs lines of business. OHIO // Fifth Third Mortgage last month terminated its resi- dential wholesale loan broker agreements to concentrate its third-party origination on cor- respondent lending, company president Bob Lewis revealed in a letter issued to brokers. "While this was an extremely difficult decision to make, we in- tend to build on our leadership position in the correspondent market and remain committed to purchasing loans from smaller financial institutions and inde- pendent mortgage companies," Lewis said in the letter. With the wholesale environ- ment growing more competitive and regulatory changes shaping business, these kinds of exits make sense for companies that don't focus specifically on that seg- ment, says Mat Ishbia, president of United Wholesale Mortgage. "Some of these banks that have multiple lines of business, they have to analyze all their business- es all the time . . . . You figure out what your core business is,"

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