trends & opportunities in the residential mortgage markets
TRANSCRIPT
Trends & Opportunities in the Residential Mortgage Markets
OBJECTIVE 1
OBJECTIVE 2
OBJECTIVE 3
THE TRENDS
THE OPPORTUNITIES
THE KEYS TO SUCCESS
OBJECTIVE 1
THE TRENDS
Non-Agency Secondary Market
Secondary Market
Collapse
Mortgage Origination Market Share of Five Largest Banks – Q1 2012
Wells 36%;
JPMorgan Chase 11%
US Bank 5%;
Citi 4%
Bank of America 4%
Total 60%
90%
Non-Agency
Need Home Prices to Stabilize
?
Case Shiller Index Dominates the News
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210
190
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110
90
Q!
19
91
Q3 1
991
Q1 1
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Q3 1
992
Q1 1
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Q3 1
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Q1 1
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Q3 1
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Q1 1
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Q3 1
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Q1 1
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Q3 1
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Q1 1
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Q3 1
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Q1 1
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Q3 1
999
Q1 2
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Q3 2
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Q1 2
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Q3 2
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Q3 2
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Q3 2
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Q1 2
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Q3 2
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Q1 2
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Q3 2
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Q1 2
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Q3 2
011
a
2.73
-7.07-0.50
-12.20
-7.68-6.03
-4.02
-1.11
-9.94
-10.05
-8.67
-5.03
-15.66
-4.84
-1.39
-4.02 -1.60
-1.92
-3.02
-3.97
-4.51
-4.09-6.03
-5.59
-3.14
-6.28
-5.67
1.08
-0.06 -5.13
-7.26
-8.64
-3.07
-6.71
-4.80
-10.33
-4.33 -0.52
-8.84
-1.83
-4.52
-2.03
-7.11
-4.02
-3.19
-9.37
-4.09-1.23
2.24
March
2011
Year over Year Change in Home Prices
HPI decreases >5%
HPI decreases <5%HPI increased
-2.59
1.27
1.31-2.51
-1.26-0.47
-2.89
-7.65
4.67
-2.7
10.29
5.66
2.61
-3.53
0.39
3.16 1.36
0.91
-1.54
-2.99
0.89
1.98-0.17
2.35
2.06
2.89
-0.14
4.44
2.62 -4.01
-1.23
-6.88
-0.05
-2.04
3.5
-0.16
0.23-1.99
1.23
1.08
0.12
2.82
3.05
1.41
2.05
-5.39
0.010.77
2.8
Year over Year Change in Home Prices
HPI decreases >5%
HPI decreases <5%HPI increasedMarch 2012
90001
8410380204
76110
37203
5540910458
33107
Location, location, location…
How Much Lower Can Rates Go?1
98
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0
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Q1 2
011
Q2 2
011
Q3 2
011
Q4 2
011
Q1 2
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Q2 2
012
Q3 2
012
Q4 2
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Q1 2
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Q2 2
013
Q3 2
013
Q4 2
013
35
37
35
22
25
26
32
46
56
65
69
71
As of June 12, 2012 – Actual and Projected in thousands – Source Mortgage Bankers Association
% Origination = Purchases
Housing Affordability at all time high
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110
90
70
50
122
83
115
206
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62 Million
5 million of the echo boomers (62 million)
turn
every year.
Household Growth has yet to stage a strong recovery
1.4
1.2
1.0
0.8
0.6
0.4
0.0
0.2
1995-2000
2000-2005
2006 2007 2008 2009 2010 2011 JCHS LOW Projection 2010-20
Men aged 25-34 living with theirparents has risen from 14% in 2005 to over 19% in 2011
2005 2011
Pent-Up Demand
Net Jobs Created
-192
217
-49 -59-29
171
93
152
68
235194
5320
127104
210
112100
223
275259
143
68 77 80
500
400
300
200
100
0
-100
-200
-300
Jun-1
0
Jul-10
Aug-1
0
Sep-1
0
Oct
-10
Nov-
10
Dec-
10
Jan-1
1
Feb-1
1
Mar-
11
Apr-
11
May-
11
Jun-1
1
Jul-11
Aug-1
1
Sep-1
1
Oct
-11
Nov-
11
Dec-
11
Jan-1
2
Feb-1
2
Mar-
12
Apr-
12
May-
12
Jun-1
2
Confidence is Key
OBJECTIVE 2
THE OPPORTUNITIES
Same products
Same customers
SeparateYourselfFrom the
Crowd
... by offering unique products.
Tailored to YOUR Market
Secondary Market Capital Flows First To Geographies with Job Growth
And Stable Home Values
Non-Agency
Huge Opportunity…
…for Non-Agency Loan Programs
Lenders Need to Act Now to Build & Deepen…
Relationships with investors …
Weathered the Storm
The Great Recession
Operate Under the Radar
”If you see a bandwagon, it’s too late.”
- James Goldsmith
Are You Ready?
OBJECTIVE 3
KEYS TO SUCCESS
Successful lenders will need…
Identify the Right Partners
Differentiated Products
Re-focus on Purchases
Low Long-Term Rates
Mortgage & Home Equity Secondary Market Trading
Thank You
Contact:
LendTrade, Inc.160 S. 68th Street, Suite 1212West Des Moines, Iowa 50266
twitter @lendtrader
www.lendtrade.com
Steven Schipper, CFAManaging Director