Originations Up Part 1

When looking at the overall condition of the real estate market most commentators will tend to look at sales of existing or new homes along with data from the home building industry. Mortgage originations are another key component in gauging the health of the housing market.

Data released from the Lender Processing Services December Mortgage Monitor report reveals that 2012 was the strongest year in mortgage originations since 2007. The LPS report shows that mortgage originations rose to 8.6 million transactions in 2012. At the same time mortgage delinquencies decreased while negative equity or “underwater” mortgages also fell.

Data from the report shows that mortgage delinquency rates are still at “elevated levels,” but clearly they also showed a steady improvement by finishing the year off 32 percent lower than at the peak in January 2010. The number of negative equity mortgages decreased by 35 percent, also showing substantial improvement.

In addition the report reveals that the national foreclosure inventory rate has seen improvement by declining towards the end of 2012 from their historic highs. There was a marked contrast between judicial and non-judicial foreclosure states relative to improvement in foreclosures.

Anytime we see an increase in the number of mortgage originations, or an increase in the number of homes sold, we also see a corresponding increase in escrow and title activity.

LPS Applied Analytics Senior Vice President Herb Blecher said, “Though still a long way off from the historic level of originations that preceded the mortgage crisis, 2012 was the strongest full year of originations we’ve seen since 2007,”

Belcher noted that origination volumes were up by approximately 34 percent on a year over year basis, with about 8.6 million new loans originated. Ho pointed out that the majority of the new loans were government-backed (84 percent in 2012 as compared to just over 50 percent at the peak) and that the trend over the last four years does point to a “slowly resurgent non-agency lending market.”