If 2020 was a successful year for the mortgage industry, then 2021 was triumphant. Record-low interest rates and record-high home prices led to the highest-ever mortgage origination volumes by Scotsman Guide’s Top Mortgage Lenders. These companies set new records while adapting to the ever-changing COVID-19 pandemic, remote work, client migrations and thinning housing supply.
A March 2022 report from Upwork estimated that 4.9 million Americans have moved due to remote work since the start of the pandemic while another 19 million are planning to move for this reason. Now that millions of potential homebuyers have the freedom to live wherever they would like, the market has heated up in new parts of the country. While coastal and dense urban areas are still popular — and homes there are selling fast and for high amounts — many workers have chosen to move to historically less expensive areas like the Sun Belt. In certain cities such as Phoenix, Tampa and Las Vegas, home prices soared by 24% or more from 2020 to 2021, according to a Redfin report.
These migration patterns meant more opportunities for the Top Mortgage Lenders to expand and increase their business across the nation. And they did exactly that, closing more than 6 million loans for an aggregate volume of $1.9 trillion in 2021. This represented an impressive increase of 1.1 million loans and $400 billion in volume from the 2020 production year.
Scotsman Guide’s 10th annual Top Mortgage Lenders rankings is topped by a new name. PennyMac Loan Services LLC took first place on the Top Overall Lenders list with $234.5 billion across more than 789,000 loans. Familiar names, however, round out the remainder of the top five. Second place went to United Wholesale Mortgage (UWM) at $226.5 billion, followed by loanDepot ($137 billion), Newrez LLC ($97.6 billion) and Homepoint ($96.2 billion). Pennymac and UWM each broke records as the first companies to cross the $200 billion marker in these rankings.
The following pages also contain the usual spread of specialty rankings. loanDepot remained in first place on the Top Retail Lenders list at $116.2 billion, a 34% increase from the previous year and the first company to break $100 billion in the retail rankings. UWM remained in first place for Top Wholesale Lenders at $226.5 billion, a staggering year-over-year increase of 65%. Pennymac took the crown in the Top Correspondent Lenders rankings, doing 74% of its business in this category for a correspondent loan volume of $174.6 billion.
Fairway Independent Mortgage Corp. took first place in the Top Non-QM Lenders category at $6.2 billion, followed by Angel Oak Lending at $3.9 billion. The government lending categories also saw a boost in volume in 2021, with rankings newcomer Pennymac sweeping the top spots in the Federal Housing Administration (FHA) and U.S. Department of Veterans Affairs (VA) loan categories.
PennyMac Loan Services LLC, No. 1 Top Overall Lender
PennyMac Loan Services burst onto the scene this year, taking the No. 1 spot in Top Overall Lenders in its first year of entering the Top Mortgage Lenders rankings. Doug Jones, president and chief mortgage banking officer for Pennymac, credits his team and recent technological advancements for the company’s wildly successful 2021.
“Looking back, it’s really a mix of having great business partnerships as well as a highly talented team, technological excellence and solid execution,” Jones said.
Pennymac invested heavily into correspondent lending technology as well as its broker platform, pricing engine and internal tools, Jones said. The company’s focus on tech in recent years also helped Pennymac weather the COVID-19 pandemic and the shift to the virtual environment, he noted. Digital infrastructure ensured that borrowers’ needs were “always at the forefront” and that the company never needed to pause the funding of loans. This consistency is part of the “secret sauce” for Pennymac, Jones said.
While big-picture focal points for Pennymac include technology and reliability, along with a healthy company culture and core values, the day-to-day processes at Pennymac are focused on the client. “Our focus is to be great on every loan, for every customer, on every part of the process, every day,” Jones said. “It’s all about executing for the customer.”
Although there has been some economic uncertainty this year due to rising inflation and mortgage interest rates, Jones said that Pennymac is “well-positioned to support our partners and their customers.” His advice for other lenders navigating economic uncertainty? “The best way to navigate uncertainty is to rely on fundamentals,” Jones said. “It’s back to basics.”
President, PennyMac Loan Services
Overall volume soars upward yet again
The Top Mortgage Lenders did more business than ever in 2021, closing more than $1.9 trillion in loans. This represented a 30% increase from last year’s $1.5 trillion in loans, and an impressive 205% increase from only five years ago, when aggregate loan volume was slightly more than $635 billion.
The 100 lenders on this list also closed more loans than ever at 6 million, a 23% increase from the 2021 rankings. And the competition has heated up for the No. 1 Top Overall Lender spot as the total loan volume for the winning company in this category has soared by 337% in the past five years.
Remote work has permanently altered the homebuying process
The rise of remote work during the COVID-19 pandemic has led to major changes in mortgage borrowing. According to the 2022 Borrower Insights Survey from ICE Mortgage Technology, nearly 75% of borrowers believe that an online mortgage process is easier than an in-person process. Many homebuyers have relocated during the pandemic (with Sun Belt cities such as Phoenix, Dallas and Orlando seeing the most in-migration) as remote work has allowed them to look further afield for their dream homes. Among homeowners who relocated for work over the past two years, 61% reported that the ability to work remotely was the main driver for their move.
This has driven a surge in technology as Realtors and originators have developed ways to remotely sell homes and close loans. Digital mortgage processes are especially important to millennial and Generation Z borrowers, who reported that their choice of lender was strongly influenced by the availability of online applications, document portals and mobile apps.
Only three years earlier, the ICE survey indicated that 52% of borrowers used an online application, but this share jumped to 64% in 2021. As mortgage applications have shifted into the digital space, lenders also have become increasingly responsive. Seven in 10 surveyed borrowers said they were contacted by their lender within 12 hours of submitting an inquiry, a sign that lenders are taking advantage of digital tools to streamline their application processes.
Despite rate hikes, home-price growth stays strong
U.S. home prices rose by 1.6% on a monthly basis this past January, a slight increase from the 1.3% growth in December 2021, according to the Federal Housing Finance Agency’s House Price Index (HPI). Year over year, home prices for purchase transactions closed through Fannie Mae and Freddie increased by 18.2%, driven by strong demand and limited supply.
Rising prices differed across the nation’s census divisions, with monthly increases at this time ranging from 0.1% in the New England region to 2.2% in the South Atlantic states. From January 2021 to January 2022, the lowest price increase was in the Middle Atlantic region (at 13.3%). During the same period, prices rose by 23.1% in the Mountain region.
“Rising mortgage rates in January certainly reflect a major change from the past several years, but lending costs remain relatively low,” FHFA supervisory economist Will Doerner said in the HPI report. “The mortgage rate shift has not dampened upward price pressure from intense borrower demand and limited supply.”
Large states power increase in VA loan volume
Home loan volume through the U.S. Department of Veterans Affairs (VA) soared across the nation in 2021. More than 1.4 million loans totaling $447.2 billion were closed, a 19% increase from the 2020 volume. According to data from the VA, California led the pack in 2021 with $64.8 billion in VA loan volume.
Virginia, Florida and Texas followed, with each state’s volume topping $34 billion. Washington, Colorado, North Carolina, Arizona, Maryland and Georgia rounded out the top 10, with each of these states reporting more than $16 billion in VA loan volume.
While California’s high home prices and large population led to the highest overall VA lending volume, it came in third for average loan size. Washington, D.C., was No. 1 in this category with an average VA loan size of $616,518 while Hawaii was No. 2 at $588,199. California’s average VA loan size was $458,361.