Learn the Top 10 Mortgage Lenders and Why Offers From Each Will Vary
The top mortgage lender in 2011 was Wells Fargo by a wide margin, with Chase and Citi following in second and third place. Does this mean these are only places you should shop for a mortgage? No! Certainly consider each of the lenders listed in our top-10 table below when loan shopping. However, home loans are commodities — a loan with Lender A's brand is not inherently better than Lender B’s brand — and all are in US currency.
Depending on your individual financial circumstances and your timing, one lender might offer you a substantially better deal than another. Here are four ways lenders’ offers may vary, and which may impact the deal they offer you:
- Underwriting standards: These vary widely. For example, Lender A may have a hard rule that disqualifies anyone with a FICO score of less than 720. On the other hand, Lender B’s underwriting department may have a graduated scale that increases the interest rate as an applicant’s score decreases, with a firm cut-off at 640.
- Points: The amount a borrower needs to pay to buy a lower rate varies by each lender's policies and view of its competition.
- Closing costs: Some closing costs are fixed, such as county filing fees and appraiser costs. Other closing fees are arbitrary and set by the lender’s policy.
- Incentives: Lenders will shave their profit margins on rates and fees to achieve internal quotas. Timing is sometimes your friend when shopping for anything, including a home loan.
- Time-to-closing: in 2012, big banks are telling borrowers closings may take 90 days to complete. A smaller, local bank, credit union, or broker may be able to close in a shorter period of time.
If your situation is challenging for banks to handle, turn to a mortgage broker. Brokers are not locked into one bank’s policies and offerings, and instead represent a variety of lenders. An experienced broker will know which lenders are willing to underwrite the self-employed, or people who do not have a long job history, or are buying a property that is, literally, off the grid.
|Top 10 Residential Mortgage Lenders|
|1||Wells Fargo & Company||$120,531|
|4||Bank of America||$22,373|
|5||U.S. Bank Home Mortgage||$18,411|
|6||Ally Bank/ResCap (GMAC)||$16,480|
|8||Quicken Loans Inc.||$10,745|
|10||Provident Funding Associates||$8,682|
More Mortgage Facts
We collected facts about the mortgage market and the top 10 mortgage lenders and shared these fun home loan facts below.
- There are 31.4 million first mortgages worth $5.4 trillion in outstanding balances in 2011. In total, there are an estimated 40 million mortgages in the US.
- 27,600,497 mortgages were current in 2011, and represent 87.9 percent of the studied mortgage loans.
- Home Affordable Modification Program (HAMP) modifications reduced payments by 36 percent on average, or $593.
- 55.4 percent of modifications made since the beginning of 2008 though 2011 that reduced payments by 10 percent or more were current and performing, compared with 34.5 percent of modifications made during that time that reduced payments by less than 10 percent.
- 2,395,565 mortgages were modified from January 2008 through September 2011.
- In June 2012, 78% of total home loan applications were for refinances.
- In June 2012, the average 30-year fixed-rate home loan was 3.87 percent. It was about 4.87 percent at the same time in 2010.
|Top 10 Residential Mortgage Servicers|
|1||Wells Fargo & Company||$1,821,833|
|2||Bank of America||$1,768,262|
|5||Ally Bank/ResCap (GMAC)||$382,788|
|6||U.S. Bank Home Mortgage||$227,413|
- Servicers reduced interest rates in 78.2 percent of all modifications made during the fourth quarter of 2011.
- Term extensions were used in 55.5 percent of modifications, principal deferrals in 24.5 percent, and principal reductions in 8.5 percent of all modifications made during the fourth quarter of 2011.
- For borrowers who qualified for modifications, servicers reduced monthly principal and interest payments by 26.5 percent.
- Of the 523,476 HAMP modifications implemented since the third quarter of 2009 66.1 percent remained current, compared with 50.9 percent of other modifications implemented during the same time period.
- Modifications that reduced payments by 10 percent or more performed better than those that reduced payments by less than 10 percent — the greater the payment decrease, the better the subsequent performance.
- In June 2012, 85% of all new home loans were 30-year fixed-rate mortgages and deeds of trust.
- Mortgage lenders classify borrowers by their FICO scores: prime, Alt-A, and Subprime. Prime is 660+, Alt-A is 620-659, and Subprime is less than 620. About 70 percent of home loans are Prime.
- Despite the popular perception that servicers are quick to foreclose, servicers initiated more than two-and-a-half times as many loan modifications, trial-period plans, and payment plans as foreclosures, short sales, and deeds-in-lieu-of-foreclosures
- Modifications on home loans held in the servicers' own portfolios performed better than modifications on mortgages serviced for others.
- 59 percent of home loans serviced by mortgage servicers are owned by Fannie Mae and Freddie Mac.
- In May 1995, the average 30-year fixed rate home loan was 9.25 percent. In this century, the highest was about 8.5 percent in May 2000.
- The average loan officer earns $76,000 per year.
- The average time to close a refinance is 45 to 90 days in 2012, up from 30 days in 2008.
- The national credit score in early 2012 was 661 for FICO or 688 for Experian's PLUS score. The highest credit score averages are found in New England residents.
- Equifax, Experian and TransUnion keep 202 million credit files.
- According to one study, 25 percent of credit reports contained serious errors that could result in the denial of credit, and 79 percent have errors of some kind.
- The average credit file contains 13 credit obligations, nine are credit cards and four are installment loans.
- According to the FHA, the maximum debt-to-income ratios to qualify for an FHA loan are 31 percent for mortgage and related payments and 43 percent for all debts, including mortgage, student loans, credit cards, auto loans, and other loans.