According to the Mortgage Graveyard report by Mortgage Daily, the number of mortgage-related failures has significantly declined this past year, and wholesale lenders are disappearing equally as quickly. However, mortgage mergers are on the rise.
Through the first quarter of 2014, 13 mortgage-related businesses tracked by Mortgage Daily either failed or closed. Through the first quarter of last year, the number of failed mortgage-related businesses was slightly higher at 15.
If the pace continues, 2014 should prove to have the fewest number of failures since prior to the financial crisis in 2006. A lack of credit union failures are credited with slowing the progress of failed businesses.
Non-bank closures for Q1 2014 were reported as 6, the same from the same quarter of the previous year. Bank failures increased slightly from 4 to 5, while credit union failures dropped noticeably—with only 2 failures in Q1 2014, compared to the 5 of Q1 2013.
Failures peaked in 2009, when 235 mortgage-related businesses closed their doors.
"Many mortgage lenders are adapting to sharply lower originations by reducing staffing, cutting branches or shutting down," said Sam Garcia, Mortgage Daily founder. "However, a good share are acquiring origination operations or agreeing to be acquired."
Garcia also commented that among those being acquired, many have sold out to banks. Others have adjusted business models to capitalize on income and originations that can be created through the acquisition of mortgage servicing rights, Garcia said.