ABA Real Estate Lending Survey Report: 21st Annual

2014
21st Annual
ABA Real Estate

Lending Survey Report
2014
21st Annual
ABA Real Estate

Lending Survey Report
Contents
Acknowledgements 1
Summary of Key Survey Findings
Survey Participant Profile
Loan Production
Loan Destination
Mortgage Products and Features
15
Escrow Services
23
Delinquencies and Foreclosures
26
Regulatory Impact
27
Automated Underwriting, Systems, Imaging and Quality Control
34
Commercial Real Estate
37
Mortgage Market Outlook and Concerns
41
2014 American Bankers Association, Washington, D.C. All rights reserved.
Acknowledgements
The American Bankers Association extends its appreciation to the bankers who
contributed essential information to the 21st edition of the Real Estate Lending
Survey. Their participation in this extensive study, despite already heavy reporting
burdens, ensured the success of this research project.
ABA Staff
Bob Davis, Executive Vice President, American Bankers Association
Rod Alba, VP, Sr. Regulatory Counsel, American Bankers Association
Joe Pigg, VP, Sr. Counsel II, American Bankers Association
Krista Shonk, VP, Sr. Regulatory Counsel, American Bankers Association
Debbie Whiteside, SVP Mortgage Solutions, American Bankers Association
Alex Maroulis-Cronmiller, VP, American Bankers Association
Data Processing and Analysis

Michael Mazur, Senior Manager, American Bankers Association
If you have a question regarding the survey, please contact:

Michael Mazur at mmazur@aba.com or 1-800-BANKERS
21st Annual ABA Real Estate Lending Survey Report
| 1
Summary of Key Survey Findings

The 21st Real Estate Lending Survey had the participation of 208 banks. The data
was collected from January 25 to February 28, 2014, and in most cases reports
calendar year or year-end results. In other cases, data reflect current activities and
expectations at the time of data collection. Of the survey participants, 65 percent of
respondents were commercial banks and 35 percent were savings institutions. About
76 percent of the participating institutions had assets of less than $1 billion.
Following the January effective dates of new Dodd-Frank
regulations, about two-thirds of respondents will be restricting

lending to Qualified Mortgages, or to QM loans plus non-QM loans
that are restricted to targeted markets or products.
About 80 percent of respondents expect that the new regulations
will have a measurable reduction in credit availability, and

two-thirds of respondents characterize the impact as moderate.
The percentage of single family mortgage loans made to first time
home buyers increased from 11 percent in 2012 to 13 percent in

2013, the highest percentage since 2007.
The average delinquency rate for single family mortgage loans
at surveyed banks decreased from 2.40 percent in 2012 to 1.87

percent in 2013, while foreclosure rates dropped from .98 percent
to .73 percent.
The 30-year fixed-rate mortgage remains dominant in bank
lending, growing from 46.3 percent to 50.3 percent of all

mortgages in 2013, and the purchase market increased from
39 percent to 44 percent of mortgage originations.
Commercial real estate (CRE) loan delinquency was reported
at 3.3 percent for non-farm, nonresidential properties, and

1.8 percent each for multifamily and ADC lending.
CRE loan demand is trending higher among 26 percent of
survey respondents compared to 2012, while it remains the

same for approximately 51 percent of respondents.
The delinquency rate was 3.32 percent in 2013 for CRE loans
secured by non-farm, non-residential properties, little changed

from 3.31 percent in 2012.
Top concerns for bankers are regulatory burden and
compliance cost.
| 2
2%
Bank Asset Sizes

Bank Asset Sizes
2% 1% 1%
Bank
4%Asset Sizes
2%
1% 4%
9%
9%
21%
21%
4%
21%
9%
13%
13%
13%
17%
17%
17%
16%
16% 16%
17%
17%
17%
to $50
million
$51-$100 million
Up toUp$50
million
$51-$100
million
$101-$200
$201-300
million million
Up to $50million
million
$51-$100
$101-$200 million
$201-300 million
$301-$500
million
million-$1 billion
$101-$200
million $501 $201-300
million
$301-$500
million
$501
million-$1
billion
$1 billion-$10
billion
$10 billion-$20
billion
$301-$500 million
$501 million-$1 billion
$1 billion-$10
billion
$10 billion-$20 billion
Over $20 billion
Over $20 billion
Over $20 billion
Bank Charter Type
Bank Charter Type
65%
Commercial
Bank
35%
Savings Bank/
Institution
Savings Bank/Institution
Commercial Bank
Bank Ownership Type
Bank Ownership Type

23%
Mutual/MHC
77%
Stock
Mutual/MHC
Stock
| 3

Participant Profile Breakdown by Region
England (Connecticut, Massachusetts, Maine,

New England
New Hampshire, Rhode Island, Vermont)
antic (D.C., Delaware, Maryland, New Jersey,
Mid-Atlantic
New York, Pennsylvania, Virginia)
e Southeast (Kentucky, North Carolina, South
Middle
Southeast
Carolina, Tennessee, West
Virginia)
Lower Southeast (Alabama, Florida, Georgia,
Lower Southeast
Mississippi)
Lakes (Illinois, Indiana, Michigan, Minnesota,
Great Lakes
Ohio, Wisconsin)
h (Louisiana, New Mexico, Oklahoma, Texas,
South
Arkansas)
Plains (Iowa, Kansas, Missouri, North Dakota,
Plains
Nebraska, South Dakota)
10%
16%
4%
4%
29%
9%
20%
(Colorado, Idaho, Montana, Utah, Wyoming)

Mountain
uthwest (Arizona, California, Hawaii,

Nevada)
Southwest
Northwest (Alaska, Oregon, Washington)
Northwest
4%
3%
1%
New England Connecticut, Massachusetts, Maine, New Hampshire, Rhode Island,

Vermont
Mid-Atlantic
Washington D.C., Delaware, Maryland, New Jersey, New York,
Pennsylvania, Virginia

Middle Southeast Kentucky, North Carolina, South Carolina, Tennessee, West Virginia
Lower Southeast Alabama, Florida, Georgia, Mississippi
Great Lakes Illinois, Indiana, Michigan, Minnesota, Ohio, Wisconsin
South Louisiana, New Mexico, Oklahoma, Texas, Arkansas
Plains Iowa, Kansas, Missouri, North Dakota, Nebraska, South Dakota
Mountain Colorado, Idaho, Montana, Utah, Wyoming
Southwest Arizona, California, Nevada
Northwest Alaska, Oregon, Washington
| 4
Loan Production
Chart 1
Total
Total Dollar
dollar Volume
volume Originated
originated for 2013
(average and median)
1-4 Family Mortgage
Home Equity (drawn lines)
Second Trusts (closed-end)
Multifamily Mortgages
$183,525,713
$43,590,390
$16,699,759
$2,820,295
$9,431,842
Average
Median
$1,675,000
$29,833,754
$4,500,000
| 5
Loan Production
Chart 2
Top Loan Origination Systems
Ranking
Loan Origination System
Encompass (Ellie Mae)
Laser Pro (Harland);

EasyLender (Fiserv)
Mortgagebot (D+H)
ARTA Lending (Wolters Kluwer)
Calyx Point (Calyx Software);

Compliance One (WoltersKluwer)
| 6
2012
Loan Production
38%
Chart 3
62%Mortgage Loan Production
14 Family
Year-to-Year Origination Comparison
Purchase
Refinance
2013
44%
56%
2011
2012
37%
38%
62%
Purchase
63%
Refinance
| 7
9%
82%
Loan Production
82%
82%
82%
Chart 4
Retail
Origination Sources at a Glance
Retail
Wholesale/Correspondent
Retail
Internet
Retail
Internet
Other
Internet
Other
Other
Internet
Other
3%
2013
6%
9%
82%
2012
5%
4%
4%
2011
6%
9%
9%
82%
81%
Retail
Internet
Other
| 8
Loan Destination
Selling Mortgage LoansChart
with5 Servicing Released vs.
Selling Mortgage Loans with Servicing Released
Servicing
Retained,
2013
vs. Servicing
Retained, 2013
Both
34%
Servicing
released
33%
Servicing
retained
33%
| 9
Loan Destination
Chart 6
14 Family Mortgage Originations (dollar volume)
Retained and/or Sold to Buyers, 2013 and 2012
2013
2013
4.3%
8.7%
39.2%
17.6%
Sold to Fannie Mae
.9%
15.1%
2012
Loans retained in
portfolio
5.6%
9.3%
Sold to Freddie Mac
40.6
14.2%
Securitized by lender
through Ginnie Mae
2012
Loans retained in
portfolio
Sold to Fannie Mae
Sold to private
mortgage conduits or
aggregators
2012
5.6%
9.3%
40.6%
Sold to private
mortgage conduits or
aggregators
Sold to other financial
institutions as portfolio
investment
Sold through FHLB
MPF/MPP Program
.1%
Sold to other financial

institutions as portfolio
investment
Sold to Freddie Mac
Securitized by lender
through Ginnie Mae
17.5%
Sold through FHLB

MPF/MPP Program
17.5%
.1%
15.0%
12.0%
| 10
15.0%
12.0%
Loan Destination
Chart 7
Where is Volume Going? A Historical Perspective
Percentage of originations sold to each of the following buyers
2013
2012
2011
2010
2009
2008
2007
2006
2005
Conduits/Wholesalers
18%
18%
17%
22%
19%
10%
15%
10%
14%
Fannie Mae
14%
12%
15%
13%
12%
5%
4%
3%
7%
Freddie Mac
15%
15%
13%
15%
17%
5%
8%
6%
7%
FHLB MPF/MPP
9%
9%
7%
5%
5%
4%
2%
2%
4%
Other
4%
6%
7%
8%
4%
2%
3%
2%
1%
| 11
Loan Destination
Chart 8
Ranking of Most Used Aggregators, Top Outlets
2013
Ranking
Aggregator
U.S. Bank
Wells Fargo
FHLB
BB&T
Frank American
2012
Ranking
Aggregator
Wells Fargo
U.S. Bank
Franklin American
Bankers Bank, PHH Mortgage

BB&T, FHLB, and SunTrust
2011
Ranking
Aggregator
US Bank
Bank of America
GMAC
JPMorgan Chase
BB&T
| 12
Loan Destination
Chart 9
For your servicing operations, do you use a
subservicer or component servicer?
Subservicer
8%
Component
servicer
2%
Both
3%
Neither
87%
| 13
Loan Destination
Chart 10
Are you contemplating selling servicing rights
due
to new regulatory
requirements
or capital
Are you
contemplating
selling
servicing rights
due totreatment
new regulatory
of mortgage
servicing
rights? servicing rights?
requirements or capital
treatment
of mortgage
Yes
11%
No
89%
| 14
Mortgage Product Features

Chart 11
Family Mortgage Mix at a Glance
Breakdown of fixed-rate and adjustable-rate mortgage production, by dollar volume
2013
2013
2.0%
.2%
4.9%
1.5% 2.5%
.1%
6.1%
9.7%
50.3%
22.7%
Fixed Rate
(30- Year)
Fixed Rate
(15- Year)
2.6%
Other Fixed
.9%
Rate
6-Month ARM
1-Year ARM
2012
1.3% .8%
5.0%
6.2%
46.3
11.9%
3/1 ARM
Fixed Rate
(30- Year)
Fixed Rate
(15- Year)
2.6%
Other Fixed
.9%
Rate
6-Month ARM
1-Year ARM
2012
2012
5/1 ARM
7/1 ARM
1.3% .8%
5.0%
25.1%
Interest-Only
ARM
Other ARM
6.2%
46.3%
11.9%
3/1 ARM
5/1 ARM
7/1 ARM
Interest-Only
ARM
Other ARM
25.1%
| 15

Chart 12
A Closer Look at Mortgage Loan Features
Average Percentage of Loans Originated (Dollar Volumes) by Features
2013
3.1%
2.1%
2.7%
Low Documentation
Mortgages
3.1%
2012
2011
9.3%
8.6% 8.9%
4.6%
3.8%
1.1%
Piggyback
Mortgages
(simultaneous first
and second
mortgages)
1.1%
2.5%
Prepayment
Penalties
Balloon Payments
| 16

Chart 13
14 Family Mortgage Loan Production
of Dollar
1-4 Family(Percentage
Mortgage
LoanVolume)
Production (percentage of
dollar volume)
2013
2012
2011
74.8
76.1
72.0
Conforming
15.0
13.7
14.0
Non-Conforming
FHA
Jumbo
3.8
3.8
5.0
6.4
6.4
9.0
| 17

Chart 14
Servicing Portfolios
Data as of year-end 2013
By Asset Size
Serviced for Bank

(averages in millions,
unless otherwise noted)
Serviced for Others

(averages in millions,
unless otherwise noted)
Over $20 Billion
$11 - $20 Billion
$2,265.6
$1 - $10 Billion
$529.6
$366.4
$501 Million - $1 Billion
$195.6
$151.0
$301 - $500 Million
$87.8
$201 - $300 Million
$74.9
$42.5
$101 - $200 Million
$31.9
$51 - $100 Million
$12.7
Up to $50 Million
$11.4
| 18

Chart 15
Average Percentage of 14 Family Loans
Made to First-Time
Home
Buyers
Average Percentage
of 1-4 Family
Loans
Made to First
Time Home Buyers
13%
11%
9%
2013
2012
2011
| 19

Chart 16
Loan-to-Value Ratios
for 14 Family Mortgage Loans Originated
2013
2013
6%
6%
18%
7%
2012
14%
60% or less
49%
60% - 80%
80% - 85%
2012
60% - 80%
80% - 85%
6%
5%
5%
19%
14%
51%
90% - 95%
19%
95% and
greater
14%
85% - 90%
90% - 95%
5%
85% - 90%
2012
60% or less
6%
5%
51%
95% and
greater
| 20

Chart 17
For For
1-414
family
mortgage
above
family
mortgageloans
loanswith
with an
LTVLTV
Above
80%:80%:
yourequire
require private
private mortgage
DoDoyou
mortgageinsurance?
insurance?
No
19%
Yes
81%
| 21

Chart 18
Percentage of 14 Family Mortgage Loans
Percentageby
of FICO
1-4 Family
Mortgage Loans by FICO
Categories
Categories
720 and above
48.0
680 and 719
32.9
620 and 679

Below 620
16.6
2.5
Escrow Services
Does your bank provide
19 for its
escrow Chart
services
Does your bank provide escrow services
mortgage customers?
for its mortgage customers?
No
12%
Yes
88%
Are escrow accounts

mandatory for mortgage
Are escrow accounts mandatory
customers?
for mortgage
customers?
Yes
27%
No
73%
| 23
Escrow Services
Chart 20 Escrow Services
Reasons for Not Providing
Reasons for Not Providing Escrow Services

Lack of escrow capabilities/adequate staff
57%
It is cost prohibitive
Lack of third-party service provider
46%
3%
Customer preference
Difficulty obtaining tax information for certain
dwellings classified as personal property
Other
26%
3%
Other reasons listed

include excessive
regulatory
requirements and high
compliance risk, as well
as not servicing
29%
| 24
Escrow Services
Chart 21
Monthly vs. Annual Escrow Account Statements, 2013
Monthly vs. Annual Escrow Account Statements, 2013

95%
9%
Monthly
Annual
| 25
Delinquencies and Foreclosures

Chart 22
Average Delinquency Rates (60-Days or More Past Due)
Average
Delinquency
Rates
(60-Days
or More Past
Due)
and Foreclosure
Rates,
14
Family Mortgage
Loans
and Foreclosure Rates
2013
2012
2.40%
1.87%
0.73%
Delinquency rate
0.98%
Foreclosure rate
| 26
Regulatory Impact
Chart 23
Percentage of 2013 Production
Percentage
of
2013
QM
Compliant
Percentage
of 2013 Production
Production
Compliant
and and
Non Non
QM Compliant
and
Non QM QM
Compliant
(Average)
QM
(average)
QM Compliant
Compliant (average)
QMCompliant
Compliant
QM
Non-QM
Compliant
Non-QM
Compliant
16%
16%
84%
84%
| 27
Regulatory Impact
Chart 24
What do you expect will be the overall impact of the
Ability-to-Repay/QM
rules
onoverall
your lending
2014?
What do you expect will
be the
impact ofinthe
Ability-to-Repay/QM rules on your lending in 2014?
Bank will restrict lending to QM segments
33%
Bank will originate primarily QM loans, and

non-QM loans will be restricted to targeted
markets only
29%
Bank will make no changes from

current/historical underwriting practices,
including those loans now classified as non-QM
Bank will cease offering mortgage loans
36%
2%
| 28
Regulatory Impact
Chart 25
If you plan to originate non-QM loans, will you:
If you plan to originate non-QM loans, will you:
Hold as portfolio investments
Sell to secondary market investors
95%
5%
Sell directly to other investors
1%
All the above
2%
| 29
Regulatory Impact
Chart 26
What do you expect will be the impact of the
Ability-to-Repay/QM
rules
on credit
What do you expect will be
the impact
of theavailability
Ability-toin
the
market
generally?
Repay/QM rules on credit availability in the market
generally?
There will be a measurable reduction in credit

availability across all mortgage lending
segments.
41%
There will be a measurable reduction in credit

availability in the non-QM lending segments
only.
There will be no measurable impact on
mortgage lending levels, regardless of QM or
non-QM classification.
40%
20%
| 30
Regulatory Impact
Chart 27
What
expect
will
beoverall
the overall
of the
What
dodo
youyou
expect
will be
the
impact impact
of the Ability-toAbility-to-Repay/QM
on credit
availability?
Repay/QM rulesrules
on credit
availability?
Severe
10%
Negligible
24%
Moderate
66%
| 31
Regulatory Impact
Have the new Dodd-FrankChart
mortgage
regulations caused
28
Havebank
the new
Dodd-Frank its
mortgage
regulations
caused your
your
to reconsider
commitment
to mortgage
bank to reconsider its commitment
lending? to mortgage lending?
Yes
38%
No
62%
| 32
Regulatory Impact
Has FEMA remapping Chart
or any
29 other issue related to
Has Flood
FEMA remapping
or any
other issue
relatedaffected
to
National
Insurance
Program
pricing
National Flood Insurance Program pricing affected
affordability
for
your
market?
affordability
forloans
loans ininyour
market?
No
53%
Yes
47%
| 33
Automated Underwriting, Systems,

Imaging and Quality Control
Chart 30
Which of the following automated 14 family mortgage
loan underwriting systems do you use?
Which of the following automated 1-4 family mortgage
loan underwriting systems do you use?
Other
6%
None
17%
Loan Prospector
16%
Both Desktop
Underwriter and
Loan Prospector
34%
Desktop
Underwriter
27%
| 34

Do you scan/image loan
Chart 31
documentation
for
Do you scan/image loan documentation for investor delivery?
investor delivery?
No
38%
Yes
62%
If not currently
imaging, is it a
If not currently imaging, is it a priority in 2014?
priority in 2014?
No
56%
Yes
44%
| 35

Chart 32
Do you
outsource
your
quality
control
Do you
outsource
your
quality
controlfunction
functionor
perform
it in-house?
or perform
it in-house?
Outsource
40.5%
In-house
59.5%
| 36

Chart 33
Percentage of total capital represented by Commercial Real
EstatePercentage
(CRE) loans
forcapital
construction,
development
of total
representedland
by Commercial
Real and
other
owner occupied
properties)
Estateland
(CRE)(excluding
loans for construction,
land development
and
other land (excluding owner occupied properties)
2013
100% and Over
50 to 99%
26 to 49%
2012
7%
6%
8%
13%
18%
15%
56%
55%
1 to 25%
0%
11%
13%
| 37

Chart 34
Percentage of total capital represented by CRE loans secured
by multifamily
nonfarm
nonresidential
properties
and
Percentageand
of total
capital represented
by CRE
loans secured
loans by
formultifamily
construction,
land development,
other and
land
and nonfarm
nonresidentialand
properties
(excluding
ownerland
occupied
properties)
loans
for construction,
development,
and other land
(excluding owner occupied properties)
2013
300% and Over
200 to 299%
2%
3%
7%
10%
16%
100 to 199%
1 to 99%
0%
2012
23%
58%
68%
7%
6%
| 38

Chart 35
CRE Loan Delinquency
2013
30 DaysCRE
or Loan
MoreDelinquency,
Delinquent,
2013
CRE loans secured by non-farm,
nonresidential properties
3.32
CRE loans secured by multifamily (5 or more)

residential properties
1.84
ADC Lending (including 1-4 family residential

construction loans)
1.82
| 39

How does demand for
Chart 36
CRE
loans
with
How does demandcompare
for CRE loans
compare
demand
a year
with
demand
a yearago?
ago?
About
the
same
51%
Higher
26%
Lower
23%
Challenges
in Making
BiggestBiggest
Challenges
in Making
CRE Loans?
CRE Loans?
Low demand for credit
53%
Fewer credit-worthy
projects
Inability to obtain funding
59%
2%
Hard caps on CRE imposed

by the regulators
10%
Other supervisory
requirements
12%
| 40
Mortgage Market Outlook Concerns

Chart 37
Looking Forward Primary Concerns Regarding the
Residential Mortgage Market in 2014
Five Most Frequent Concerns
Cost of compliance
Regulatory burden
Continuing impact of Dodd-Frank
Lack of loan volume/demand
QM/ATR impact
| 41
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2014

ABA Real Estate

ABA Real Estate

Survey Participant Profile

Mortgage Products and Features

Delinquencies and Foreclosures

Automated Underwriting, Systems, Imaging and Quality Control

Commercial Real Estate

Mortgage Market Outlook and Concerns

2014 American Bankers Association, Washington, D.C. All rights reserved.

Data Processing and Analysis

If you have a question regarding the survey, please contact:

21st Annual ABA Real Estate Lending Survey Report

Summary of Key Survey Findings

regulations, about two-thirds of respondents will be restricting

will have a measurable reduction in credit availability, and

home buyers increased from 11 percent in 2012 to 13 percent in

at surveyed banks decreased from 2.40 percent in 2012 to 1.87

lending, growing from 46.3 percent to 50.3 percent of all

at 3.3 percent for non-farm, nonresidential properties, and

survey respondents compared to 2012, while it remains the

secured by non-farm, non-residential properties, little changed

21st Annual ABA Real Estate Lending Survey Report

Survey Participant Profile

Bank Asset Sizes

Bank Charter Type

Bank Charter Type

Bank Ownership Type

Bank Ownership Type

21st Annual ABA Real Estate Lending Survey Report

Survey Participant Profile

England (Connecticut, Massachusetts, Maine,

(Colorado, Idaho, Montana, Utah, Wyoming)

uthwest (Arizona, California, Hawaii,

New England Connecticut, Massachusetts, Maine, New Hampshire, Rhode Island,

South Louisiana, New Mexico, Oklahoma, Texas, Arkansas

Plains Iowa, Kansas, Missouri, North Dakota, Nebraska, South Dakota

Mountain Colorado, Idaho, Montana, Utah, Wyoming

Southwest Arizona, California, Nevada

Northwest Alaska, Oregon, Washington

21st Annual ABA Real Estate Lending Survey Report

Home Equity (drawn lines)

Second Trusts (closed-end)

21st Annual ABA Real Estate Lending Survey Report

Loan Origination System

Encompass (Ellie Mae)

Laser Pro (Harland);

ARTA Lending (Wolters Kluwer)

Calyx Point (Calyx Software);

21st Annual ABA Real Estate Lending Survey Report

21st Annual ABA Real Estate Lending Survey Report

Origination Sources at a Glance

21st Annual ABA Real Estate Lending Survey Report

21st Annual ABA Real Estate Lending Survey Report

Sold to Fannie Mae

Sold to Freddie Mac

Sold to other financial

Sold to Freddie Mac