RealtyTrac: TRID Dragged Down Fourth-Quarter Mortgage Originations


Although 2015 wasn’t a bad year for mortgage originations in comparison with 2014 – total volume increased 1% for the year – it could have been a lot better if origination volume hadn’t decreased so dramatically in the fourth quarter, RealtyTrac’s Q4 2015 U.S. Residential Property Loan Origination Report shows.

And that decrease was due, at least in part, to the Consumer Financial Protection Bureau’s (CFPB) new TILA-RESPA Integrated Disclosure (TRID) rules, also known as the “Know Before You Owe” rules.

According to the report, about 1.6 million loans were originated on residential properties (one- to four-units) in the fourth quarter – a decrease of 14% compared with the third quarter but still up 1% from the fourth quarter of 2014.

The decrease was mostly due to a 24% quarter-over-quarter drop in purchase volume – the biggest quarterly drop since the third quarter of 2010, RealtyTrac says. However, refinances were down, as well.

About 38.8% of all originations in the fourth quarter were purchases, while about 42.8% were refinances and 18.5% were home equity lines of credit (HELOCs).

Refinances were down about 7% compared with the third quarter but were still up 2% compared with the fourth quarter of 2014, according to the report.

HELOC originations were also down 7% from the previous quarter but were still up 7% from a year ago.

In a release, Daren Blomquist, vice president of RealtyTrac, says, “New mortgage rules implemented at the beginning of October likely contributed to the decrease, but weakness in some local economies could also be contributing to the decrease, most notably in oil-producing markets such as Houston and Oklahoma City, both of which saw purchase originations decrease by double-digit percentages both quarterly and annually.”

“Primary causes of the decrease were lending institutions embracing new TRID guidelines implemented in October, as well as abnormally low listing inventories across the country,” says Michael Mahon, president of HER Realtors, covering the Ohio markets of Cincinnati, Dayton and Columbus.

For more, including a breakdown of origination volume by state and metro area, click here.

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