Mortgage Mergers on the Rise in 2014

Although the number of mortgage-related casualties has significantly declined this past year, wholesale lenders are disappearing at a brisk pace. Meanwhile, mortgage mergers are on the rise. From Jan. 1 through March 31, Mortgage Daily tracked 13 mortgage-related businesses that either failed or were closed. The data was collected for the Mortgage Graveyard, a journal of mortgage-related entities that have either failed, closed or been acquired since 1998. The latest numbers were two fewer than had been tracked as of the same point last year. At the current pace, the number of casualties is on track to be the fewest since prior to the financial crisis in 2006. The year-over-year decline reflects a drop in credit union failures. Type Q1 2014 Q1 2013 Non-bank closures  6 6 Bank failures (FDIC) 5 4 Credit union failures 2 5 Total mortgage-related failures 13 15 Prominent among this year's closings are wholesale mortgage lenders—with five wholesaler closings tracked so far this year. Another notable casualty was the Mortgage Insurance Companies of America, which has discontinued operations. However, a new trade group has been launched to take MICA's place. Mortgage casualties peaked in 2009, when 235 mortgage-related businesses closed. Much more significant this year have been mortgage-related mergers and acquisitions. During the first quarter, 18 acquisitions were tracked. To put that number in perspective, just 32 mortgage M&A transactions were tracked for all of last year. "Many mortgage lenders are adapting to sharply lower originations by reducing staffing, cutting branches or shutting down," Mortgage Daily Founder and Publisher Sam Garcia said. "However, a good share are acquiring origination operations or agreeing to be acquired." Among those being acquired, several have sold out to banks, Garcia said. Others are adjusting their business models to capitalize on income and originations that can be generated through the acquisition of mortgage servicing rights.