No one is taking market share quite like Wells Fargo: Wells Fargo now makes twice as many mortgage loans as any other lender. In 2011, Wells accounted for 26.8 percent of all loans. Bank of America, with 11.6 percent, and Chase, with 11.5 percent, were next in line. B of A dropped 8 percentage points, falling from 19.5 percent in 2010.

Five of the nation’s top nine mortgage lenders in 2007 were no longer in business in 2011. Countrywide (1st), Washington Mutual (sixth), Wachovia (7th – now part of Wells), ResCap (8th – now part of GMAC), and IndyMac (9th) are all gone.

The economy might be improving, but getting a loan is getting harder. In 2009, when the sky was falling and bankers were going without bonuses, lenders still originated $1.8 trillion in mortgage loans. By last year, lending had dropped 34.5 percent from ’09. Things were so bad in 2009 that some bankers were not even getting bonuses. Wait. No. That is not true. Goldman Sachs paid its employees a bonus of, on average, $595,000 in 2009.  However, by other indicators, things were harder: six million Americans were looking for jobs.

We have lost a lot of equity in our homes. According to the Federal Reserve, homeowners have lost $7 trillion in home equity. That’s four years of mortgage loans. It means that Americans now have less than half of what they had in their homes back in 2006. A lot of folks have called the gradual pull back in household debt “the Great Deleveraging,” but it might also be called the Evaporation of Home Equity.

Deleveraging is Overstated: Americans have less debt, but a lot of that is a product by millions of foreclosures on aggregate sums of household debt. In fact, US households have recently taken on an additional $20 billion in non-mortgage debt – things like student loans, car loans, mobile home loans, and credit card debt. In other words, the shrinking mortgage loan market is complemented by an expanding consumer credit supply.

FHA is in trouble: Almost 10 percent of FHA loan debt was classified as “seriously deliquent” and 17.8 percent were more than 30 days delinquent.

Although loans guaranteed by the Federal Housing Administration can be the best way to buy a home with a low down payment, its lending guidelines are suddenly very strict.

The Neighborhood Watch guidelines mean that the average credit score for a loan (more…)

Government pulls back on jumbo mortgages:  It appears certain that come October, HUD will stop offering backstops for FHA loans of more than $625,000. The new size would occur save for a decision to extend the temporary loan limit rules that Congress expanded in 2008. Fannie and Freddie, in turn, will cease to buy loans above the new loan limit amount.

This is bad news for anyone that owns a home worth more than $729,750 in high-cost (more…)

While a shutdown would mean that the Federal Housing Administration will suspend new guarantees of mortgages, it probably won’t change things very much.

FHA guaranteed loans are very important right now. FHA and VA constituted approximately one-third of new mortgages up in 2010, and most of that was from FHA. FHA raised its premiums and this dampened the appetite for those loans. (more…)

While a lot has been said about how banks are moving risk off their balance sheets and on to the Federal Housing Adminisitration, those critiques are really too broad. Yes, banks are relying on the FHA loan program, but others are not.

The FHA charges an upfront premium to borrowers when it makes a loan. The fee is currently 1 percent. There are  (more…)