The last U.S. economic recession beginning in late 2007 – its nucleus rooted in sub-prime problematic loans – hit the mortgage department of banks hard, forcing thousands of layoffs. Banks essentially quit lending for a period of 12-18 months by some estimates and demand for mortgage processors was almost nonexistent. That’s about to change as banks are gearing up for a boom in mortgage and refinance applications from homeowners taking advantage of low interest rates and relaxed requirements designed to keep the housing recovery in full swing and boost the economy.
According to Bureau of Labor Statistics, employment directly related to mortgages rose 9 percent to 285,000 up to October 2012 reports marking the highest number since 2008, driven by the housing recovery and Federal Reserve efforts to push down borrowing costs. While the expected mortgage boom will add profits to the bottom line of the banks and boost employment, they already are riding high bolstered by record income. By some industry analysts’ projections, the top five companies reported a record $8.35 billion in income from mortgage banking during the third quarter. The income was rooted in many ways in the efforts of the Federal Reserve, as it implemented its quantitative easing (QE) effort that included purchasing mortgage bonds to push down borrowing costs to record lows. 30-year rates are currently 3.34 percent, down from 5.05 percent in February 2011, providing fuel for refinances and new home purchases. Individual top banks are reporting multiple positive indicators pointing to growth and economic recovery in full swing.
JPMorgan $JPM recently reported a record $5.7 billion in quarterly earnings and increased its mortgage origination operations by 50 percent this year to 10,200. The company reported that mortgage origination volume at the bank reached $47 billion in September, representing a 29 percent rise from a year earlier. The company recently agreed to buy MetLife Inc. $MET’s $70 billion mortgage-servicing business, a move designed to grow its capacity in this area by as much as 5 percent. Wells Fargo indicated it is adding 2,500 loan underwriters company-wide to handle expected demand, along with its 7,000 mortgage processors hires.Pages: