Success in 2024 depends on using 2023's lessons

The mortgage industry took it on the chin in 2023, with many of those same factors hurting it now likely to affect next year's profitability. That includes the Fed's own statements prior to the December meeting on keeping the short-term rates it controls higher for longer as it parses data around inflation, noted Lee Smith, president of mortgage at Flagstar Bank. While rates have declined to under 7% , that is still much higher than the coupon many existing borrowers hold. Smith noted more capacity needs to be wrung out of the system. And that brought him to one of the big lessons of 2023 that lenders must take to heart in the coming year. Smith warned lenders that "if you're in the mortgage origination business, you want to be focused on profitability, not market share."?

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Mortgage apps for new construction sole bright spot

For the 10th month in a row , the share of mortgage applications for newly constructed homes increased, with first-time home buyers making up a significant portion, the Mortgage Bankers Association said. Lenders received 21.8% more applications on an unadjusted basis for these properties in November compared with one year prior, the MBA's Builder Application Survey found. But versus October, volume was down by 12%. New construction is the one bright spot for originators in what has been a very difficult 2023 when it comes to purchase loans, noted Mike Fratantoni, the MBA's chief economist. Housing starts data released on Tuesday showed permitting activity for November was at six-month high.

Trade groups voice concern over reduced FHA, Ginnie Mae budgets

In a joint letter this week, leading housing industry trade groups voiced concerns over proposed reductions in funding at key government-finance agencies, asking Congress to fulfill requests at previously approved levels. Even as both chambers of Congress approved funding close to the amounts originally requested by both the Federal Housing Administration and Ginnie Mae, a budget agreement enacted this past spring aims to lower overall annual discretionary spending by 1% in fiscal 2024 from the previous year. Such a cutback to the Transportation and Housing and Urban Development Appropriations, or THUD, bill will hamper the ability of both agencies to fulfill their missions in an already challenged market, the groups argue.

Dovenmuehle Mortgage chops employee headcount

Dovenmuehle Mortgage, Inc., a subservicer for the financial services industry, made the decision to "operate with a smaller footprint" by laying off 212 employees going into the new year. The subservicer moved to trim its staff "due to a reduction in the number of loans subserviced," the company wrote in an internal communication shared with National Mortgage News. The layoff, which impacts the company's headquarters, goes into effect Feb. 16, 2024, according to a Worker Adjustment and Retraining Notification Act notice filed in Illinois. It is uncertain what positions were trimmed.

Senior borrowing, home equity set records

Seniors held a record amount of equity in their homes , but also hit a high in terms of the amount of borrowings outstanding they had against it at the end of the third quarter, the National Reverse Mortgage Lenders Association and Riskspan found in a new report. People ages 62 and up held a total $13.08 trillion in the third quarter, consisting of a $15.39 billion in property value offset by $2.32 billion in borrowing. This demographic's quarterly home equity totaled nearly $12.7 trillion the previous fiscal period and $11.81 trillion a year earlier.?

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