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Who's who in wholesale.

The top wholesaler in 1991 purchased $7.6 billion in production To even make the top-10 lost of wholesalers in 1991, lenders had to buy a minimum of $2.4 billion in production. These huge volumes by the largest wholesalers indicate the growing share of loan volume coming in through this booming means of production.

Annually, for the past five years, my company has gathered and examined data on wholesale loan production. We simply collect the prior year's actual purchase volume numbers, along with the projection for the current year. Eighty-one companies are polled.

Figure 1 lists these wholesalers alphabetically and shows their actual and projected purchase volumes, in millions of dollars, for 1991 and 1992, respectively. A final column provides the year-over-year rate of change.
FIGURE 1
Top Wholesale-Mortgage Bankers in Alphabetical Order

Firm 1991 1992 % Growth

Action Mtg 300 500 67%
American Liberty Bank 627 540 -14%
American Residential Mtg 1500 1950 30%
America's Lending Network 100 600 500%
AmSouth Mtg 250 500 100%
AmSouth Mtg n.a. n.a. n.a.
BancBoston Mtg 3400 5600 65%
BancPlus Mtg 400 650 63%
Barclays American Mtg 500 1500 200%
Boston Five Cents SB 650 900 38%
Capstead Mtg 2200 6000 173%
Centerbank 600 900 50%
Chase Home Mtg 2000 2300 15%
Chemical Mtg 4000 5000 25%
Citicorp n.a. 1250 n.a.
Citizens Fidelity B &T 300 300 0%
Collateral Mtg 650 300 200%
Colonial Mtg 630 1000 54%
Comerica Mtg 200 200 0%
Commercial Federal Mtg 300 500 67%
Commonwealth-United Mtg 1100 3000 173%
Countryside Funding 5100 1200 135%
Courtesy Funding 1900 2800 47%
Crestar Mtg 400 800 100%
Crossland Mtg 1400 2000 43%
Dollar Mtg 600 900 50%
Dominion Bankshares Mtg 1300 1400 8%
Echelon Mtg 450 1200 167%
Empire of America RCC 1200 2500 10%
FBS Mtg 700 1600 129%
First American Mtg 600 600 0%
First Fed or Rochester 300 700 133%
First Franklin Fin'l 1700 2200 29%
First NH Mtg 500 600 20%
First Union Mtg 4400 1500 -66%
Fleet Mtg Group 7600 9600 26%
Fortune SB 300 600 100%
GMAC/RFC 6000 7500 25%
GN Mtg 800 1300 63%
Greentree Mtg 500 600 20%
Greenwich Capital Fin'l 2400 2000 -17%
Gulf States 180 520 189%
Hamilton Financial 800 1200 50%
Huntington Mtg 1400 2000 43%
IMCO Realty Services 3400 n.a. n.a.
Imperial Bank Mtg 1400 1750 25%
Independence One Mtg 1200 1700 42%
Inland Mtg 900 1200 33%
Interfirst Federal SB 600 1000 67%
J.I. Kislak Mtg 1200 1500 25%
KeyCorp Mtg 1000 2000 100%
LaSalle Talman Mtg 250 400 60%
Lincoln Service Corp 1100 1500 36%
Loan America Fin'l 1900 2750 45%
Margaretten & Co. 600 1200 100%
Marine Midland Mtg 1600 2100 31%
Mark Twain Mtg 200 350 59%
Merchants Mtg 600 800 33%
Meridian Mtg 330 950 188%
Monument Mtg 700 800 14%
National Pacific Mtg 470 750 60%
NationsBank Mtg 1700 2100 24%
Norwest Mtg 6000 8000 33%
Pinnacle Mtg 450 700 56%
Plaza Funding 3700 5000 35%
Prudential Home Mtg 6700 1300 94%
RAC Mtg Funding 2500 n.a. n.a.
Republic Mtg Services 1000 2400 140%
Sears Mtg 1600 2000 25%
Shawmut Mtg 300 400 33%
Shearson Lehman Hutton Mtg 2400 3800 58%
SourceOne n.a. n.a. n.a.
TCF Mtg 300 400 33%
Troy & Nichols 600 900 50%
University Financial 300 425 42%
Washtenaw Mtg 700 1200 71%
Western Federal SB 2000 2500 25%
Western Sunrise 530 900 70%
TOTAL 08957 160685 47%

n.a. = not available
Totals include estimates for Citicorp, IMCO, and RAC where data was not
available but not for ARCS or SourceOne.
Figures are in millions.


Before reviewing the 1991 figures for the largest companies, several definitions are in order. For purposes of this article, the term "wholesale lending" or "wholesaling" is used to encompass any indirect loan production: that is, loans purchased or acquired from a direct originator. The direct originator is the party taking the application from the borrower.

This originator may or may not process, underwrite, close and fund the loan. When the originator does handle all of these functions, he or she is referred to as a correspondent. If the person only originates, or originates and processes, he or she is called a mortgage broker.

Indirect or wholesale production stands in contrast to direct or retail production. Retail lenders rely exclusively on their own corporate employees, usually via branch offices, for originations; wholesale lenders produce loans by purchasing them from another company's employees.

The data include purchases of both closed and table-funded first mortgage loans sold on a servicing-released basis. The loans were acquired through the extension of best-effort and mandatory commitments. Best-effort commitments are issued on a loan basis; mandatories allow both individual and bulk-loan sales. Flow includes individual loan deliveries as well as assignments of trade (AOT), coissues and concurrent transfers. Loans produced through all of these sales mechanisms are included in the data. Block servicing transfers were not included in this data because servicing and not the loans are sold in these transactions. (See "Wholesale Commitments" in the September 1992 issue of Mortgage Banking for a detailed review of the various types of transactions.)

1991's top 10

Ranked by volume, the 10 largest wholesalers in 1991 were Fleet Mortgage Group (Providence, Rhode Island); Prudential Home Mortgage Company, Inc. (Clayton, Missouri); Norwest Mortgage, Inc. (Des Moines); GMAC/Residential Funding Corporation (RFC) (Bloomington, Minnesota); Countrywide Funding Corporation (Pasadena, California); First Union Mortgage Corporation (Charlotte, North Carolina); Chemical Mortgage Company (Worthington, Ohio); Plaza Savings and Loan (Santa Ana, California); BancBoston Mortgage Corporation (Jacksonville, Florida); IMCO Realty Services (now North American Mortgage) (Santa Rosa, California); RAC Mortgage Funding (Ryland Mortgage Company [parent] Columbia, Maryland); Greenwich Capital Financial, Inc. (now WESAV) (Irving, Texas); and Shearson Lehman Hutton Mortgage (Irvine, California).

To hold one of the top-10 slots in 1991, a company needed to purchase at least $2.4 billion last year. Figure 3 lists these wholesalers and their purchased figures for 1991, along with those of the other top 50 companies. At least $600 million in purchase activity was needed to be included in this group of top 50 wholesale lenders. All of these companies price quite competitively.
FIGURE 3
Top 50 Wholesale-Mortgage Bankers Ranked by 1991 Purchases

Firm 1991 1992 % Growth

Fleet Mtg Group 7600 9600 26%
Prudential Home Mtg 6700 1300 94%
Norwest Mtg 6000 8000 33%
GMAC/RFC 6000 7500 25%
Countrywide Funding 5100 12000 135%
First Union Mtg 4400 1500 -66%
Chemical Mtg 4000 5000 25%
Plaza Funding 3700 5000 35%
BancBoston Mtg 3400 5600 65%
IMCO Realty Services 3400 n.a. n.a.
RAC Mtg Funding 2500 n.a. n.a.
Greenwich Capital Fin'l 2400 2000 -17%
Shearson Lehman Mtg 2400 3800 58%
Capstead Mtg 2200 6000 173%
Chase Home Mtg 2000 2300 15%
Western Federal SB 2000 2500 25%
Loan America Fin'l 1900 2750 45%
Courtesy Funding 1900 2800 47%
NationsBank Mtg 1700 2100 24%
First Franklin Fin'l 1700 2200 29%
Sears Mtg 1600 2000 25%
Marine Midland Mtg 1600 2100 31%
America Residential Mtg 1500 1950 30%
Crossland Mtg 1400 2000 43%
Huntington Mtg 1400 2000 43%
Imperial Bank Mtg 1400 1750 25%
Dominion Bankshares Mtg 1300 1400 8%
Independence One Mtg 1200 1700 42%
J. I. Kislak Mtg 1200 1500 25%
Empire of America RCC 1200 2500 108%
Lincoln Service Corp 1100 1500 36%
Commonwealth-United Mtg 1100 3000 173%
Republic Mtg Services 1000 2400 140%
Citicorp n.a. 1250 n.a.
KeyCorp Mtg 1000 2000 100%
Inland Mtg 900 1200 33%
Hamilton Financial 800 1200 50%
GN Mtg 800 1300 63%
FBS Mtg 700 1600 129%
Washtenaw Mtg 700 1200 71%
Monument Mtg 700 800 14%
Boston Five Cents SB 650 900 38%
Colonial Mtg 650 1000 54%
American Liberty Bank 627 540 -14%
Centerbank 600 900 50%
Merchants Mtg 600 800 33%
Margaretten & Co. 600 1200 100%
Troy & Nichols 600 900 50%
Interfirst Federal SB 600 1000 67%
First American Mtg 600 600 0%
TOTAL 100127 144440 44%

n.a. = not available
Totals include estimates for Citicorp, IMCO, and RAC where data was not availabl
e
but not for ARCS or SourceOne.
Figures are in millions.


The following are 1991's largest wholesalers, along with a brief overview of the types of wholesale programs they offer. They all paid top dollar for their purchases. The starred companies specialize in jumbo production.

Fleet Mortgage Group - The top-ranked company in 1991 purchased $7.6 billion through its national correspondent program. Although limiting its assignment-of-trade business, the company's flow correspondent program operated at maximum capacity. Customers need substantial net worth to deal with Fleet and often receive delegated underwriting in return. FHA/VA and conventional loans are purchased. We estimate that the company's correspondent volume represented three-fourths its total annual origination activity.

Prudential Home Mortgage* - Holding down the second ranking for wholesale volume in 1991, Prudential purchased $6.7 billion through a variety of programs. It offered programs for correspondents, usually financial institutions, like banks and thrifts and for mortgage brokers, including those who take the application but do not process the loan. Broker loans are closed and funded at the table. Customer-approval requirements vary by program. Prudential Home Mortgage purchases only conventional loans; its America's Division acquires FHA/VA loans via assignments of trade. About two-thirds of its origination activity came from wholesale.

Norwest Mortgage - Ranked third, the company purchased $6 billion through a correspondent program featuring best-effort and mandatory commitments. Bulk and flow programs are available including best effort, mandatory, assignments of trade and coissues. A variety of loan products is offered. Mortgage brokers without warehouse lines need not apply. About one-half of the company's total production was retail.

GMAC/Residential Funding Corporation* - Tied for third, this company, which is really a conduit, not a wholesaler, purchased and securitized $6 billion of loans through bulk and flow correspondent programs. Conduits provide expanded services over straight wholesale lenders, including direct access to the capital markets and master servicing. Correspondent-approval requirements are stringent and include agency approvals. Retail production, which is handled by GMAC Mortgage, accounted for approximately 40 percent of total originations.

Countrywide Funding Corporation* - The fourth-ranked wholesaler in 1991 purchased $5.2 billion via correspondent and broker programs offering a plethora of loan products. Loans were purchased on a bulk and flow basis from correspondents and on a flow basis from mortgage brokers. Mandatory and best-effort commitments are offered. Countrywide's table-funded business is the largest in the country. It also holds the distinction of having the largest number of customers. Each of its three sourcing channels, retail, closed loans and table-funded, account for about one-third of the company's total production.

First Union Mortgage - Fifth-ranked in 1991 wholesale volume, it acquired $4.4 billion through its table-funded broker program, which operated from three servicing centers and a correspondent program. Only conventional loans are purchased from brokers who must maintain at least $250,000 in net worth. No service-released premiums are paid, and only best-effort and mandatory commitments are offered. Approximately one-third of the company's total originations came from retail.

Chemical Mortgage* - Ranked sixth among wholesalers in 1991 volume, the company purchased $4 billion in closed loans under its correspondence program. Customer-approval requirements vary depending on whether or not the customer is a financial institution. Bulk and flow, best-effort and mandatory commitments are issued for FHA/VA and conventional products. Table funding was not offered. The acquisition of Manufacturers Hanover Bank and Centrust Mortgage, along with the parent bank's lending operation, has now opened the company's door to mortgage brokers. Retail production accounted for only about 14 percent of the company's total.

Plaza Savings and Loan - Seventh-ranked, this wholesaler purchased $3.7 billion in 1991, mostly through a table-funded program and a closed loan purchase program. Neither coissues nor assignment of trades were offered. The lender, which only does business in the West, was the nation's largest regional wholesaler and purchased a wide variety and large volume of ARMs. At 10 percent of its total production, the company had the smallest retail percentage of any of the top companies listed.

BancBoston Mortgage - Ranked eighth, the company purchased $3.4 billion, mostly through a correspondent program offering flow delivery commitments including assignments of trade, coissues, best-effort and mandatories. A small table-funded program was initiated and is growing handsomely. Retail production accounted for only 20 percent of the company's total origination activity.

IMCO Realty Services - Tied at eighth largest in 1991 volume, this regional wholesaler, then operating only in the West and Southwest, purchased $3.4 billion, mostly in its table-funded program. The former IMCO (now North American Mortgage) offers myriad conventional products and best-effort commitments. Customer-approval requirements are basic; the program attracts large numbers of smaller brokerage companies, which are prevalent in its California-based market. The company does not offer a correspondent program. Approximately 40 percent of its total production was retail.

RAC Mortgage Funding* - This wholesaler, also a conduit (Ryland Acceptance Corporation), purchased $2.5 billion to rank ninth in 1991 wholesale volume. It buys on a bulk and flow basis from correspondents with substantial net worths. Assignments of trade and coissues are not offered. The company has a fairly unusual product menu and operates nationally.

Greenwich Capital Financial - Ranked tenth in 1991 volume, the company bought $2.4 billion of conventional and FHA/VA loans under its broker and correspondent program banners. Loans were also purchased in bulk. Flow business includes the issuance of assignments of trade; mandatory and best-effort commitments are extended; customer approval requirements vary depending on the program. Greenwich carried the distinction of being one of on two companies in this roster not doing any retail business.

Shearson Lehman Hutton Mortgage* - Tied for tenth largest wholesaler in 1991, the company has a conduit division, a correspondence program and a broker program. Collectively, $2.4 billion was acquired through a variety of mandatory, best-effort and coissue commitments.

The 13 companies occupying the top 10 slots purchased $55.1 billion in 1991. This represented 55 percent of the volume purchased by the top 50 companies and 53 percent of the volume purchased by all 81 companies listed in Figure 1.

The 1992 picture

On average, these companies expected to increase volume by 41 percent during 1992. The company with the most aggressive expansion plan was Countrywide Funding; it set out to more than double 1991's level of activity this year. (When the final figures are in, it will have quadrupled its original wholesale projection target set a year ago.) Four of the top ten companies projected growth rates exceeding 50 percent. Two companies, Greenwich Capital and First Union, scaled down their wholesale activity in 1992 versus 1991. Greenwich's projected 17 percent decline reflected its decision to terminate bulk acquisitions of seasoned loans from the RTC. (The company actually planned to double its correspondent and broker program volumes year-over-year.) According to management, First Union's pullback in wholesale reflected renewed interest in retail production business.

The leader board in 1992

Figure 4 lists 1992's largest wholesalers ranked according to their corporate volume projections. Only two new names - Capstead Mortgage and Commonwealth-United Mortgage - entered the ranks of the largest wholesale companies. Capstead Mortgage, a spinoff of Lomas Financial, expected to purchase $6 billion, nearly triple its year earlier purchase volume. Capstead managed to even exceed that considerable sum, but that is a story for another time. Commonwealth-United operates nationwide and offers programs for correspondents and brokers. To make the cut-off for the largest projected volumes, the minimum volume was $3 billion.
FIGURE 4
Top 50 Wholesale-Mortgage Bankers Ranked by 1992 Purchases

Firm 1991 1992 % Growth

Prudential Home Mtg 6700 13000 94%
Countrywide Funding 5100 12000 135%
Fleet Mtg Group 7600 9600 26%
Norwest Mtg 6000 8000 33%
GMAC/RFC 6000 7500 25%
Capstead Mtg 2200 6000 173%
BancBoston Mtg 3400 5600 65%
Chemical Mtg 4000 5000 25%
Plaza Funding 3700 5000 35%
Shearson Lehman Mtg 2400 3800 58%
IMCO Realty Services 3400 n.a. n.a.
Commonwealth-United Mtg 1100 3000 173%
RAC Mtg Funding 2500 n.a. n.a.
Courtesy Funding 1900 2800 47%
Loan America Fin'l 1900 2750 45%
Western Federal SB 2000 2500 25%
Empire of America RCC 1200 2500 108%
Republic Mtg Services 1000 2400 140%
Chase Home Mtg 2000 2300 15%
First Franklin Fin'l 1700 2200 29%
NationsBank Mtg 1700 2100 24%
Marine Midland Mtg 1600 2100 31%
Crossland Mtg 1400 2000 43%
Huntington Mtg 1400 2000 43%
KeyCorp Mtg 1000 2000 100%
Sears Mtg 1600 2000 25%
Greenwich Capital Fin'l 2400 2000 -17%
American Residential Mtg 1500 1950 30%
Imperial Bank Mtg 1400 1750 25%
Independence One Mtg 1200 1700 42%
FBS Mtg 700 1600 129%
Barclays American Mtg 500 1500 200%
J. I. Kislak Mtg 1200 1500 25%
First Union Mtg 4400 1500 -66%
Lincoln Servicef Corp 1100 1500 36%
Dominion Bankshares Mtg 1300 1400 8%
GN Mtg 800 1300 63%
Citicorp n.a. 1250 n.a.
Hamilton Financial 800 1200 50%
Inland Mtg 900 1200 33%
Echelon Mtg 450 1200 167%
Washtenaw Mtgf 700 1200 71%
Margaretten & Co. 600 1200 100%
Colonial Mtg 650 1000 54%
Interfirst Federal SB 600 1000 67%
Meridian Mtg 330 950 188%
Western Sunrise 530 900 70%
Boston Five Cents SB 650 900 38%
TOTAL 98210 144450 47%

n.a. = not available
Totals include estimates for Citicorp, IMCO, and RAC where data was not availabl
e
but not for ARCS or SourceOne.
Figures are in millions.


Figure 2 ranks the 50 largest wholesaler 1992 volumes. All expected growth of 33 percent or more; 37 projected at least 50 percent growth; 18 expected doubling in size. Among those anticipating the fastest growth rates were America's Lending Network (Frederick, Maryland), Collateral Mortgage (Birmingham), BarclaysAmerican/Mortgage Corporation (Charlotte), Gulf States Mortgage Company, Inc., (Atlanta) and Meridian Mortgage Corporation (Wayne, Pennsylvania). Barclays and Meridian became major national wholesalers in 1992.
FIGURE 2
Top 50 Wholesale-Mortgage Bankers Ranked by 1992 Growth Rate

Firm 1991 1992 % Growth

America's Lending Network 100 600 500%
Collateral Mtg 100 300 200%
Barclays American Mtg 500 1500 200%
Gulf States 180 520 189%
Meridian Mtg 330 950 188%
Commonwealth-United Mtg 1100 3000 173%
Capstead Mtg 2200 6000 173%
Echelon Mtg 450 1200 167%
Republic Mtg Services 1000 2400 140%
Countrywide Funding 5100 1200 135%
First Fed of Rochester 300 700 133%
FBS Mtg 700 1600 129%
Empire of America RCC 1200 2500 108%
Fortune SB 300 600 100%
KeyCorp Mtg 1000 2000 100%
Margaretten & Co. 600 1200 100%
AmSouth Mtg 250 500 100%
Crestar Mtg 400 800 100%
Prudential Home Mtg 6700 13000 94%
Washtenaw Mtg 700 1200 71%
Western Sunrise 530 900 70%
Commercial Federal Mtg 300 500 67%
Interfirst Federal SB 600 1000 67%
Action Mtg 300 500 67%
BancBoston Mtg 3400 5600 65%
BancPlus Mtg 400 650 63%
GN Mtg 800 1300 63%
LaSalle Talman Mtg 250 400 60%
National Pacific Mtg 470 750 60%
Mark Twain Mtg 220 350 59%
Shearson Lehman Mtg 2400 3800 58%
Pinnacle Mtg 450 700 56%
Colonial Mtg 650 1000 54%
Troy & Nichols 600 900 50%
Dollar Mtg 600 900 50%
Hamilton Financial 800 1200 50%
Centerbank 600 900 50%
Courtesy Funding 1900 2800 47%
Loan America Fin'l 1900 2750 45%
Crossland Mtg 1400 2000 43%
Huntington Mtg 1400 2000 43%
Independence One Mtg 1200 1700 42%
University Financial 300 425 42%
Boston Five Cents SB 650 900 38%
Lincoln Service Corp 1100 1500 36%
Plaza Funding 3700 5000 35%
Shawmut Mtg 300 400 33%
Inland Mtg 900 1200 33%
Merchants Mtg 600 800 33%
Norwest Mtg 6000 8000 33%
TCF Mtg 300 400 33%
TOTAL 58230 103795 78%

Figures in millions.


Despite the many companies listed in our compilations, the roster does not represent anywhere near the entire universe of lenders who produce through wholesale. We learned this when we did the 1992 Mortgage Broker Industry Study. A complete roster would include 400 or more companies. Nearly all of the additions would be smaller, local-market wholesalers doing $500 million or less. An example of such a company would be University Financial, the wholesale operation owned by First Federal of Elgin, Illinois. It purchased $300 million in the metropolitan Chicago area in 1991.

Because the same companies participate in this poll every year, the data can be examined to ascertain trends in activity. From 1990 to 1991, wholesale production grew 75 percent, from $62.2 billion to $108.9 billion. This compares with a 28 percent rise in aggregate residential origination activity over the same period (from $453 billion to $580 billion). Clearly, it indicates strong expansion. This growth is due to two factors: a big increase in residential originations and the favorable economics of wholesaling. Sometime in the first quarter of 1993, we will know whether the projected wholesale volume for 1992 achieved its 47 percent growth target or not. Chances are, it did, mightily.
COPYRIGHT 1992 Mortgage Bankers Association of America
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

Article Details
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Title Annotation:wholesale mortgage banks
Author:Lamalfa, Thomas S.; Olson, David
Publication:Mortgage Banking
Article Type:Cover Story
Date:Dec 1, 1992
Words:3464
Previous Article:Market share still fragmented.
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