The world adjusted to a new normal in 2021 as new variants of the COVID-19 virus extended pandemic-driven restrictions, kept remote workers at home and continued to impact families across the nation. Supply chain issues, a labor shortage and rising inflation caused difficulties for businesses large and small, and increased prices were passed along to consumers.
As the year progressed, bright moments emerged and the clouds began to part. Vaccines became available to the public, gathering places reopened, and life returned to restaurants, theaters, stadiums and museums. Children went back to school and unemployment dropped dramatically across the country.
As the nation begins to heal from the impacts of the pandemic, much of the future is uncertain. If new variants continue to develop, it could prompt a retightening of restrictions and have serious economic impacts. Despite all of the uncertainty, the mortgage industry did incredibly well in 2021 as homes flew off the proverbial shelves.
Welcome to the 13th annual Scotsman Guide Top Originators rankings, the centerpiece of our April residential magazine. In the following pages, we recognize brokers and bankers across the country for their hard work and accomplishments during a record-breaking year.
The housing market in 2021 was stellar for mortgage professionals. With record-low interest rates, record-high home prices, and strong demand for both home purchases and refinances, our Top Originators worked harder and did more business than ever.
For the first time ever, two originators crossed the $2 billion mark. Thuan Nguyen of Loan Factory Inc. maintained his spot in first place in the 2022 Top Dollar Volume rankings. Nguyen originated $2.47 billion in volume in 2021, a new record for the rankings, and closed an astonishing 6,605 loans.
The second originator to break $2 billion was Shant Banosian of Guaranteed Rate. With $2.21 billion in volume, Banosian recorded a 30% year-over-year increase in sales volume and closed 4,140 loans.
Four other familiar names crossed the $1 billion mark in this year’s rankings: Ben Cohen of Guaranteed Rate, Christopher Gallo of NJ Lenders Corp., Mark Cohen of Cohen Financial Group and Mike Roberts of City Creek Mortgage. With stiff competition this year, each originator in the top 10 had to increase their volume by millions just to keep their spot.
In a particularly impressive showing during the 2021 production year, Arizona-based Tim Potempa of Fairway Independent Mortgage Corp. nearly doubled his volume, going from $448.1 million to $857 million. He jumped from 32nd place in the 2021 rankings to eighth place this year. Risha Kilaru of Guaranteed Rate also rose into the top 10, jumping from 19th place in last year’s rankings by increasing her volume from $539.6 million to $834.8 million.
Numbers are up across the board for many Top Originators. More than 11,000 originators qualified for our rankings this year by doing $40 million in origination volume or by closing 100 loans. Only two years ago, the cutoff to be included in our print rankings of the top 500 originators was $89 million. This year, the cutoff was $172 million.
Alongside the Top Dollar Volume rankings in this edition of Scotsman Guide, you’ll find our second Top Non-QM Volume rankings. As the popularity of nontraditional mortgages rises, sales volumes have increased and the cutoff to make the top 75 for our print rankings rose from $17.9 million last year to $24.1 million this year.
Throughout the year, Scotsman Guide Residential Edition will print additional rankings content. In May, Top Women Originators returns for its fourth year. In June, the popular Top Mortgage Lenders rankings will be published. Top Veteran Originators will return for a third year in July, just in time for Independence Day.
The Top Purchase Volume and Top Refinance Volume rankings will be released in August. Other specialty categories (such as Top Mortgage Brokers, Top Mortgage Bankers, Top VA Volume and State Champions) will be released throughout the year.
Visit ScotsmanGuide.com if you’re curious to see these categories early. Many of our lists are available online right now, including Most Loans Closed, an online-exclusive rankings list. This year, entrants closed more than 2.2 million loans. There were 399 people who each closed at least 500 loans and 45 who closed more than 1,000 loans.
No one is ever sure how the year ahead will go. The mortgage industry is facing an uncertain future, especially with refinances, as interest rates are forecast to rise throughout the year. Purchase originations, however, look promising in 2022 amid strong demand, rising home prices, the easing of supply chain woes and rising levels of new construction. Best of luck to all originators and their business partners this year — may the winds of change fill your sails.
Another record year expected for purchase originations
Purchase originations are forecast to reach new heights again in 2022 with a record $1.74 trillion, according to a report this past January from the Mortgage Bankers Association (MBA). That’s a 5.5% increase above the estimated total of $1.65 trillion in 2021, which broke a 16-year-old record set in 2005.
“The economy and labor market rebounded in 2021, but overall growth fell short of expectations because of stubborn supply chain issues that fueled faster inflation,” MBA chief economist Mike Fratantoni said last year. Assuming that economic growth continues and supply chain issues ease, the purchase loan market should remain strong, Fratantoni predicted.
Other organizations have more conservative predictions. Redfin predicted a rise in home purchases of only 1% in 2022. “We will see a rush to buy homes at the start of the year before mortgage rates rise,” Redfin chief economist Daryl Fairweather said. “That early onslaught of demand will deplete the supply of homes for sale.”
Citing affordability issues, Fannie Mae predicted in its 2022 forecast that total home sales will drop by 1.2% from 2021. Historically high inflation, along with rising home prices and interest rate increases, may price many would-be buyers out of the market.
Rates should rise significantly in 2022
After 2020 ended with an all-time low interest rate of 2.68%, according to Freddie Mac, mortgage rates began to climb modestly last year, although they dipped back below 3% during the summer months. But after a 20 basis-point increase this past fall, rates ended 2021 at an average of 3.1%.
Low rates helped to propel the mortgage market to new heights last year, but with rising inflation, Federal Reserve policy changes and lower numbers of COVID-19 infections, rates are expected to rise throughout this year. Rates jumped significantly this past January, and as of Feb. 17, 2022, the average 30-year fixed rate sat at 3.92%, Freddie Mac reported. Many experts have forecast four or more rate hikes throughout this year, and the Mortgage Bankers Association predicted an end-of-year rate of 4%.
Rising rates contributed to a decline in refinance originations in 2021, and experts expect to see an even steeper drop in refis in 2022. While rising rates heavily impact refinance volumes, they aren’t likely to impact purchase lending activity in the same way.
Home prices are set to decelerate
Home prices are expected to grow again in 2022 but at a slower pace compared to 2021. According to the MBA, the completion of new-home construction that was delayed in 2021, as well as more homeowners listing their homes, should increase supply and decelerate home-price growth.
Fannie Mae’s 2022 forecast predicts strong home-price appreciation of 7.6% this year. This represents a significant slowdown from the expected growth of 17.3% in 2021, but it’s still a meaningful increase from the average annual pace of 5.4% from 2012 to 2019. By the end of 2022, the MBA forecast that the median price of an existing home will climb to $364,600 while the median price of a new home will rise to $410,100.
Redfin expects to see buyers moving to more affordable cities such as Columbus, Ohio; Harrisburg, Pennsylvania; and Indianapolis, where median home prices are still less than $250,000. Popular Sun Belt cities such as Phoenix, Atlanta and Austin have seen home prices rise significantly since the start of the COVID-19 pandemic, making them less attractive to potential buyers this year. Instead, Redfin said, buyers will keep an eye on more affordable cities, where net migration is beginning to rise.
After a record year, existing-home sales look uncertain
In 2021, existing-home sales reached an estimated 6.13 million, the strongest year since 2006, the Mortgage Bankers Association (MBA) reported. High demand and low interest rates swept homes off the market as quickly as they appeared. Whether this trend will continue in 2022 is up for debate among experts, but most agree that the market won’t see a dramatic decline in sales this year.
Rising mortgage rates precipitated by increases to the Federal Reserve’s benchmark rate are expected by all pundits, but it’s not clear when or how aggressive the Fed’s hikes will be. Buyers may flood the market in the first half of this year to lock in lower rates, but sales could fall in the latter half if rates rise to 4% or higher.
Zillow and the MBA each predicted a record year for existing-home sales. Zillow called for an increase of 7% to 6.57 million units sold, while the MBA predicted a 4.7% increase to 6.42 million sales.
Meanwhile, Fannie Mae and the National Association of Realtors each predicted that existing-home sales will fall by 3.2% to roughly 5.9 million. But the number of single-family and multifamily homes under construction as of December 2021 was at its highest since 1973, so the home-purchase market should be bolstered by the addition of new homes later this year.
Foreclosures drop to lowest recorded rate
Foreclosure filings dropped to their lowest-ever recorded rate in 2021, according to an Attom Data Solutions report. Last year, there were 151,153 U.S. properties with reported foreclosure filings, a 29% decrease from 2020 and a 95% drop from the post-recession peak of 2.9 million in 2010.
“The COVID-19 foreclosure tsunami that some people had anticipated is clearly not happening,” RealtyTrac executive vice president Rick Sharga said in the report. “Government and mortgage industry efforts have prevented millions of unnecessary foreclosures, and while it’s likely that we’ll see a slight increase in the first quarter, we probably won’t see foreclosure activity back to normal levels before the end of 2022.”
Sharga said that a gradual increase in foreclosure activity should be expected as pandemic-related government policies and programs expire. Strong economic recovery should prevent a large increase in defaults, but delinquent borrowers will eventually exhaust their loan modification options.
According to the report, the states with the highest rates of foreclosure last year were Nevada, Illinois, Florida, Delaware and New Jersey. Among metro areas with at least 1 million residents, the highest foreclosure rates occurred in Cleveland, Las Vegas, Miami, Jacksonville and St. Louis.
Housing starts to trend upward again
Housing starts saw strong growth in 2021, according to the National Association of Home Builders (NAHB). Single-family home starts were up 13.4% year over year while multifamily starts rose by 22%. Low inventory and strong demand encouraged growth over the past two years, but builders are being hampered by supply chain constraints, meaning that housing starts are expected to cool in 2022 with predicted growth of 1% for single-family projects, NAHB chief economist Robert Dietz said.
Along with the ongoing supply chain problems, labor shortages and rising costs for building materials and appliances have slowed the construction process. Despite these roadblocks, homebuilder confidence in the market remains high, with the NAHB/Wells Fargo Housing Market Index at or above 80 for five straight months as of this past February (scores above 50 indicate good conditions).
The Mortgage Bankers Association’s 2022 forecast estimated single-family housing starts to reach nearly 1.24 million, representing slightly more growth than NAHB’s prediction. The MBA also predicted starts for homes with two or more units to decline slightly this year, from 472,000 in 2021 to 469,000 in 2022.
Rough year expected for home-refinance market
Despite much uncertainty in the 2022 housing market, experts agree that home-refinance loan originations are slated for a dramatic decline. While refinances outpaced purchases throughout 2020 and 2021, Freddie Mac’s first-quarter 2022 forecast predicted that trend to reverse. The Mortgage Bankers Association (MBA) parroted that prediction in its January 2022 forecast, with an expectation that the refinance share of the market will drop from 53% in Q4 2021 to 28% in Q4 2022.
Freddie Mac expects refi origination volume to drop from $2.7 trillion in 2021 to $1.2 trillion in 2022 and $930 billion in 2023. The MBA forecast refi originations on one- to four-unit homes to slow to $861 billion this year.
Rising mortgage rates are largely to blame for the expected drop in refinances, but if rates stay relatively flat, refis may stabilize. Zillow predicted that the renovation boom will continue in 2022, and if supply chain issues lessen and prices for building materials come down, cash-out refinances may bolster the overall refi numbers. It’s worth noting that last year’s predictions also expected a dramatic drop in refis, but what followed was an excellent year in 2021.
Foreign buyers expected to return to U.S. market
According to a National Association of Realtors (NAR) report, $54.4 billion in residential home purchases were made by foreign buyers between April 2020 and March 2021. This represented 2.8% of the total dollar volume of existing homes sold. In this same time frame, foreign buyers purchased 107,000 existing homes with a median purchase price of $351,800.
The home-sales figure represented a 31% decline from the previous year, but this drop was expected due to the COVID-19 pandemic and resulting travel restrictions. Despite this contraction, the end of 2021 saw rising investment in U.S. real estate and mortgage assets by foreign buyers and investors, according to M. Ryan Gorman, CEO of Coldwell Banker Real Estate. If this trend continues as pandemic-related travel restrictions lift, it could increase demand and strain the domestic housing supply even further in 2022.
“As funds from around the world seek safe, stable and valuable investment opportunities, U.S. real estate remains among the most attractive and largest asset classes for investors and families alike,” Gorman said in an interview with Forbes.
