Chapter 16
Mortgage Volume Leaders in the
Top 100 MSAs

Whatever happened to the issue of consolidation in the residential mortgage industry? A few years back Countrywide's Angelo Mozilo and Washington Mutual's Kerry Killinger boldly predicted that by 2007 just five lender/servicers would control 90% of the mortgage business in the U.S. But if you take a look at the number of residential lenders filing Home Mortgage Disclosure Act (HMDA) forms with the Federal Reserve it appears that the number of mortgage funders is actually increasing. How can this be?

The answer to that question is a bit tricky. For starters, residential production has soared the past few years, topping out at $3.9 trillion in 2003, but 2004 was darn good at $2.8 trillion and similar volumes are anticipated for 2005. What's driving the volume? Answer: historically low mortgage rates, soaring home values (which create more 'home equity'), and the ease in which new, de-novo mortgage lenders can obtain financing from warehouse providers and Wall Street conduits. Also, research conducted for this edition of the Mortgage Industry Directory has found that many mortgage brokers have converted to mortgage bankers and/or function as a hybrid of the two, depending on the loan situation.

Of course, the top five funders — Countrywide, Wells Fargo Home Mortgage, Washington Mutual, Chase Home Finance, and Bank of America — today account for 43.51% (combined) of all mortgages produced in the U.S. (Five years ago the top five accounted for just 29% of all production.) But it should be pointed out that the nation's mega lenders fund loans through three different production channels: retail, wholesale, and correspondent. In the correspondent channel, a "big fish" (Countrywide, Wells Fargo) purchase already-funded mortgages from smaller players. This has created a "whales and minnows" world where smaller "feeders" are upstreaming product to the big fish.

The Beauty of HMDA — MSA Volume Leaders

In this chapter we present the top residential funders in the nation's 100 largest metropolitan statistical areas (MSAs). By analyzing the figures here mortgage bankers can pinpoint geographic areas that aren't dominated by the mega lenders. Then again, that's easier said than done.

As you can see by looking at the table in this introduction the nation's "big five" dominate in the nation's 10 largest MSAs. Countrywide — the largest residential funder in 2004 and 2005 (anticipated on the later) — ranked first in production six times. WaMu, ranked first three times. Bank of America ranked first once but ranked third four times. In other words, as one might deduct, the big shops dominate in the largest MSAs, but they don't totally dominate. Rarely does a number one ranked lender have a market share north of 13%. Then again, 13% is nothing to sneeze at.

As this book went to press new HMDA figures for calendar year 2004 were on the verge of being released. Buyers of the eMID modules (lenders, servicers, commercial) will get the updated data free. Each year any firm that funds more than $5 million in loans must file detailed reports with the Fed. Included in the HMDA filings is dollar volume of loans originated, number of loans, seconds funded, who the lender sells its loans to (Fannie Mae, Freddie Mac) and more. (Because mortgage brokers do not fund loans they do not have to file with the Fed.)

The HMDA results come out each year in mid-August. The information is helpful but flawed. The biggest problem? The results are almost nine months old by the time the public sees it. Also, the Fed lumps "wholesale" and "retail" production into one data point. By comparison, National Mortgage News, the publisher of this book segments production into three channels: retail, wholesale and correspondent. (Our readers prefer the more specific channel breaks.)

Another downside to the HMDA figures is the lack of contact information. The Fed database includes addresses but no contact information and no telephone numbers. In that case you should consult the telephone information in this edition in the selected chapters on lenders and servicers. If you would like customized cuts of the HMDA database please call Deartra Todd at (202) 434-0320 or email: Deartra.Todd@SourceMedia.com.