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Quicken Loans reports that it closed the largest volume of mortgage loans in the company’s 25-year history in September, with approximately 15,500 home loans totaling $3.4 billion in loan volume.

The tally bested the previous record set just one month before for the Detroit-based lender, which closed 14,000 loans with a value of $3.15 billion in August.   It’s an impressive performance for the Internet-based lender, coming despite an extremely weak market for home sales. Currently, about 80 percent of all mortgage loan applications are to refinance existing mortgages, according to figures from the Mortgage Bankers Association (MBA).   Although the market for refinancing appeared to be largely saturated just a few months ago, activity began to pick up through the summer as rates declined. According to the MBA, refinance applications in late August hit their highest level since May 2009, at the tail end of the major refinancing boom that occurred after the Federal Reserve took aggressive action to drive down interest rates. 

Mostly repeat refinancers

  Bob Walters, chief economist for Quicken Loans, said most of the company’s refinance activity has been among people who had refinanced previously, as they’re the ones with the equity to qualify. He said they’re seeing fewer first-time refinancers, because most of those with the ability to refinance have already done so.   “A lot of the ones who were stuck at 6 percent are still stuck,” he said.   At the same time, he said there’s a growing awareness among many underwater homeowners that they do have options. He said about one-quarter to one-fifth of Quicken’s refinance activity has come under the government’s Home Affordable Refinance Program for underwater homeowners.   “People who didn’t think they could refinance are becoming aware that they can,” he said. 

Underwater borrowers: try, try again

  He said it’s well worth it for people who are slightly underwater to check into refinancing possibilities, and not get discouraged if a lender turns them down.   “If they say no, we can’t help you, call somebody else,” he said. “It’s like getting a second opinion – it doesn’t cost anything to get an opinion.”   Walters said part of Quicken’s success in recent months has been due to the fact that about half of the people who were writing mortgages at the peak of the housing market are no longer in the business. Much of the rest he attributed to an efficient business model that enables the company to close most of its loans in less than 30 days. 

Assembly line approach

  Instead of having one person processing each loan, Walter said Quicken has taken an assembly line-type approach, where different teams focus on separate steps of the mortgage approval process, with one group handling appraisals, one doing underwriting, etc.   “It’s the same think as back at the turn of the last century, where it took a team of three or four guys three weeks to build a car,” he said.   Quicken expects to issue about $30 billion in mortgage loans this year, up from $25 billion in 2009. The company, which writes mortgages in all 50 states, is the nation’s largest online retail mortgage lender and ranks among the top five retail mortgage lenders overall.

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