Magazine article American Banker

Hope Springs Eternal for Good Loan Volume

Magazine article American Banker

Hope Springs Eternal for Good Loan Volume

Article excerpt

Byline: Paul Muolo

Until a few months ago, it was thought that 2012 might turn out to be a disaster year for loan production, one in which refinancings finally withered and home purchases continued to be anemic. But not anymore.

Then again, no one is anticipating a banner year either. But with interest rates staying relatively benign a despite a recent uptick and then a decline a many lenders are feeling, well, happy.

"The depressive mood that we've been used to has sort of lifted," said one investment banker, requesting that his name not be used. "People feel good a for now. But just don't ask them about servicing values."

Jay Brinkmann, chief economist for the Mortgage Bankers Association, believes part of the mild optimism stems from the new Harp 2.0 program. "Harp will hold up volumes," Brinkmann said, "but how much a we don't know." Late last year Harp was updated, allowing all current underwater loans from government-sponsored enterprises to be refinanced regardless of LTV status.

Brinkmann is forecasting just under $1.1 trillion of residential fundings this year. He sees refis accounting for roughly 61% of fundings this year, a figure that includes Harp.

According to figures compiled by National Mortgage News and the Quarterly Data Report, lenders funded just over $1.4 trillion in loans last year, 67% of which were refis.

If MBA's number becomes a reality, it means originations will fall by about 21%, which might cause some shops to merge or cut staff.

But MBA is not alone in the prognostication game. Freddie Mac is a bit more optimistic, forecasting residential fundings of $1. …

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