Tight credit conditions, higher mortgage rates, and a big drop in refinancings will push residential originations below $1 trillion this year to levels not seen since 2000, according to economists at the Mortgage Bankers Association (MBA).

MBA chief economist Jay Brinkmann estimated lenders will originate $966 billion in single-family loans in 2011, down 35% from 2010.

He told reporters that he reduced his estimate somewhat because of the impact of loan-repurchase requests lenders are receiving from Fannie Mae, Freddie Mac, and the mortgage insurers. "That will continue to hold down originations," Brinkmann said Wednesday during an MBA press briefing on the state of the mortgage industry.

MBA president and chief executive John Courson said credit standards are very tight and lenders are being even more conservative to shield themselves from repurchases from the government controlled GSEs.

He noted lenders are receiving buyback requests in cases where a loan has been current for 24 months but goes delinquent due to a job loss. "Lenders are just afraid and pulling back to protect themselves from future repurchases," Courson said.

In recent conference calls discussing 4Q10 results, most of the mega banks voiced their opinion that buybacks have peaked.

MBA's chief economist is forecasting that purchase originations will total $614 million this year, up from $473 million in 2010. But refinancings will drop to $352 billion in 2011, down 66% from last year.

According to figures compiled by ASR sister publication National Mortgage News and the Quarterly Data Report, lenders of all stripes funded $1.55 trillion in home loans in 2010, compared to $1.9 trillion in 2009. The industry's best year ever came in 2003 when mortgage bankers, overwhelmed by refinancings, funded $3.9 trillion in loans.

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