U.S. RESIDENTIAL MORTGAGE ORIGINATIONS
PURCHASE
REFINANCE
HELOCs
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
0
FEATURED ARTICLE
Data-Fed Disruption Bringing Balance to the Mortgage Marketplace
AS THE MARKET TURNS Lilly said that Phoenix recognizes the shifting market and in response is advocating a dual strategy com- bining data-driven efficiencies with strategically applied insight from subject matter experts. “As the mortgage environment aggressively adjusts from scaling to meet customer needs to capturing margin in a severely contracting market, it will be important for all participants to get the most out of each asset,” he said, referring spe- cifically to the MSR space. “A combi- nation of data tools and specialized knowledge will be applied to retained portfolios and trading strategy to ensure that tailored organizational objectives are met and the maximum value of portfolios are realized.”
As the mortgage environment aggressively adjusts from scaling to meet customer needs to capturing margin in a severely contracting market, it will be important for all participants to get the most out of each asset.
BY DAREN BLOMQUIST
RYAN LILLY
I n the 10 years since the last housing downturn, mortgage in- dustry innovators have been laying the groundwork for success in both feast and famine. “We’ve set up a suite of services that is somewhat recession-proof, as long as we are capturing market share in those core functions,” said Ryan Lilly SVP of mortgage services with Phoenix, a Denver, Colora-
do-based company that provides a variety of services for mortgage servicers and companies trading mortgage servicing rights (MSR). The market appears poised to test this hypothesis as rising mortgage rates weaken demand, particularly for refinance home loans. Refinance originations decreased 21 percent year-over- year in the third quarter of 2018
to a new record low as far back as data is available — Q1 2000. The third quarter drop marked the sixth consecutive quarter with an annual decrease in refinance originations. Although not down as sharply, purchase originations in Q3 2018 decreased 2 percent from a year ago — also the sixth consecutive quarter with a year-over-year decrease.
Demand for mortgages is cooling even as interest in data- and ma- chine-driven innovation continues to heat up, and that combination is a potential recipe for excessive risk if not handled delicately, according to Kevin Marshall, president and co-founder of Clear Capital, a Reno, Nevada-based company that pro-
vides real estate valuations to the mortgage industry. “There is an appetite for analyt- ics. At the same time we have rising interest rates, and the potential softening of the economy,” he said, cautioning that analytics should be rigorously tested to ensure they stand up in a more volatile hous-
4 think realty housing news report
february 2019 5
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