``Making a case for the terrible times in mortgage lending is becoming harder every day. (And look - we have a new kind of subprime loan.) Not only are margins at record levels, and loan officers making more now than prior to LO comp changes, but we learn that mortgage origination volume for 2012 was up 34% versus 2011! Lender Processing Services reports that at 8.6 million units, we experienced the best year since 2007 (9.1 million units). It was hard to ignore refinancing (if a borrower could qualify) with 30-yr rates below 4%. LPS reports that the share of government-backed originations was 84%, which while very high, is down from 91% three years earlier. For those lenders who have built their livelihoods and future around refinancing, LPS believes an additional 2.6 million loans may be eligible for HARP under current guidelines (we're at about 2 million so far). Throw in some appreciation, perhaps a new government refi program, falling delinquencies and foreclosures, continued decent rates, and 2013 might be just fine. Finally, LPS noted that at least 2% of 2012 originations would have been designated as "non-QM," compared to 23% back in 2005.''

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