It’s Hard Out There For Lenders

We all know that the mortgage industry isn’t easy for lenders looking to get more volume and technology vendors looking to get more clients, and now there’s some data to echo this sentiment. Richey May & Co has released its fourth quarter 2013 Trend Report for Independent Mortgage Bankers. Among the report’s findings are reductions in production, refinance and purchase volumes, and decreases in the average FICO score of borrowers. The fourth quarter 2013 Trend Report was based on information provided by 29 independent mortgage banking firms.

Richey May is a provider of accounting and business advisory services to the mortgage industry and co-creator of Richey May Select, a benchmarking technology platform specifically for independent mortgage bankers. Richey May quarterly trend reports, which are created using Richey May Select, highlight key performance indicators, such as overall volume and volume by transaction type, margins, operating costs, labor output, and more. These reports are provided free of charge to all Richey May Select subscribers.

The following are some of the report’s findings:

>> Overall production volume decreased by an average of just under 11%. Most lenders saw production decline between 6% and 55%.

>> Refinance volume fell 9%, and purchase volume decreased nearly 12%.

>> The distribution of FICO scores changed by 2%, with lenders closing more loans with FICO scores ranging from 651 to 700, and fewer with FICO scores above 750.

>> Approximately one third of lenders that had not previously extended credit to borrowers with scores under 600 began to do so during the 4th quarter of 2013.

“Lenders are trying a lot of different things to keep production levels up – lending to borrowers with lower FICO scores is just one of them,” said Ken Richey, managing partner of Richey May. “In order to maintain a competitive edge, lenders need to know what their competition is doing. This is one of the reasons that reports like our quarterly trend reports are so important. They give independent mortgage bankers an apples-to-apples comparison of their company’s performance to that of their peers and specific market.”

Richey May Select utilizes much of the same information that its independent mortgage banker sources provide to the GSEs each quarter via the Mortgage Bankers’ Financial Reporting Form (MBFRF). With Richey May Select, users can access current, relevant, and actionable peer-to-peer benchmarking information on various aspects of their financial, production, employment, warehousing and servicing operations. Lenders can tailor results based on their competitors’ loan production volume; primary operating model – whether retail, wholesale or direct-to-consumer; small, medium or large production platforms; and other unique characteristics and requirements. Unlike static benchmarking reports, with Richey May Select, all information is current and available roughly six weeks after the end of each quarter.

About The Author

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Tony Garritano
Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.