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c1ue
05-26-07, 11:49 AM
First: From Barry Habib of Mortgage Market Services via a 3rd party:

According to Barry Habib, there were 485,000 loan originations in 2004. By the end of 2006 there were 232,000, and by the end of this year there will be an estimated 200,000, or roughly where we were back in 2001.

Second: April 2007 price data analysis from Gabriel Stein of Lombard Street Research via same 3rd party:

The significant development there was that the median price of a new home fell below that of an existing home. Monthly price data for both new and existing homes goes back to 1975. In that period, there is only one brief period - from September 1981 to February 1982 (and only in three of those six months) - when prices of new homes were lower than those of existing homes." As she notes, that period also had a very high stock of unsold homes.

I have a graph but don't have a link to hook it from.

If this is really only the beginning, housing is in for a rough ride. Another point made was that the new house price behavior would seem to indicate that home builders are acting like car makers - selling for whatever net can be gained. I'll look into this more when I have the chance.

DemonD
06-01-07, 09:40 PM
How is it possible that there were 250k home loan originations when there were like 1.5 million sales last year?

c1ue
06-04-07, 10:16 AM
I'm not an expert, nor do I have access to the original data (as noted above, information source via 3rd party).

However, my understanding is that a single loan origination does not necessarily mean a single residential loan.

Thus the securitization of mortgages is likely one reason why loan originations are decreasing; rather than creating individual mortgages as originated loans, instead groups of loans with similar characteristics are originated together as a single event.

The 2004 number probably includes a significant fraction of originations in the 'old' style, but the 2006 number is probably fully in the 'MBS' arena.

AgMike
06-04-07, 10:10 PM
I'm not an expert, but a foreclosure counts as a sale. Back out foreclosures, and you'll get closer to the real sales number.

DemonD
06-05-07, 04:10 AM
However, my understanding is that a single loan origination does not necessarily mean a single residential loan.

clue, i did a little basic research, and that "loan origination" is the process of funding a loan from marketing to closing. I don't see where that leaves wiggle room for closing many loans at one time.

http://www.investopedia.com/terms/o/origination.asp

The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property.

Investopedia Says... Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real property. It is through this process that the terms of the mortgage agreement (amount of loan, interest rate, compounding frequency, etc) are established and the involved parties legally bind themselves to the transaction.

Barron's (via answers.com)

Loan Origination

The process of making a new loan from marketing to closing.
Example: A mortgage banking firm originated an average of 100 home mortgage loans per month. Its salespeople solicited Realtors® for business. After loan origination, the mortgage loans were sold to an investor or to Fannie Mae.

So yeah, it just doesn't jive. Maybe those are traditional bank loans? Or one certain type of loan? Or just FHA loans?

c1ue
06-09-07, 08:11 AM
Sorry for the slow response - navigating the Russian trade markets/incorporation procedures is taking all of the 3 weeks I expected it to.

Anyway, your points are cogent: I have asked the question on how these numbers are derived or at least how these origination numbers correspond with the actual houses sold.

Certainly there are ways to avoid a loan on a new house: barter transaction, foreclosure, cash payment, etc but these cannot be that large.

From my own mortgage loan pool experience - I was just wondering if it is the pool of money directed toward loans which could count as a single origination as opposed to each individual loan extracted from the pool.

If so, and if an MBS works similarly, this could explain the discrepancy between number of originations and houses sold.

But until some clarification comes, I think no useful information can be obtained just yet.

Will keep you posted if something bounces back.

DemonD
06-09-07, 05:42 PM
No worries clue. Pretty much everyone who can read understands that housing is going down, if this is another piece of that puzzle, it's probably not anything that is vital right now. Thanks for the effort, it is an interesting little piece of the puzzle.