Quicken Loans Officially the Biggest Mortgage Lender in the Country

Posted on April 24th, 2020
Quicken Loans Officially the Biggest Mortgage Lender in the Country

Back in early 2018, Quicken Loans proclaimed it was the largest mortgage lender in the country, thanks to a solid fourth quarter in 2017.

It managed to originate $25 billion in home loans, beating out its long-time rival Wells Fargo by about $2 billion.

However, there was a caveat: it only counted retail loan origination volume. Wells Fargo does a ton of correspondent mortgage lending as well, whereby its product is resold by other banks.

When taken together, the San Francisco-based bank was still the king, and by quite a large margin. But that has finally changed.

Quicken Funded Nearly $52 Billion in the First Quarter

  • Detroit-based Quicken Loans originated $51.7B in home loans during Q1
  • Company increased their lending slightly from the fourth quarter
  • San Francisco-based Wells Fargo only managed $48B over same period
  • A near-20% decline from the fourth quarter of 2019

In the first quarter, Quicken Loans reported $51.7 billion in home loan originations, pushing it to the top of the rankings of the first time ever, per new figures from Inside Mortgage Finance.

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While the Detroit-based nonbank lender has been referring to itself as “America’s Largest Mortgage Lender” since overtaking Wells on retail originations, it is now truly the #1 mortgage lender across all lending channels.

Quicken Loans only saw “a modest increase in first-lien mortgage production” from quarter to quarter, but it was more than enough to finally give them the out-and-out crown.

That’s because Wells Fargo saw originations slip 20% from the fourth quarter of 2019 to $48 billion, despite a year-over-year improvement of 45%.

Wells Fargo first mortgages (in billions)March 31, 2020Dec 31, 2019Sep 30, 2019Jun 30, 2019Mar 31, 2019
Retail$23$27$27$26$14
Correspondent$25$33$30$27$18
Other$1$1
Total$48$60$58$53$33

Two Mortgage Lenders Moving in Opposite Directions

  • Wells Fargo became top mortgage lender in 2008 after Countrywide Financial went under
  • Retained that lead overall until the first quarter of this year thanks to strong correspondent lending business
  • Quicken Loans has seen production grow tremendously thanks to Rocket Mortgage brand
  • Wells Fargo also has a digital mortgage you’ve probably never heard of, and those scandals didn’t help either

Wells Fargo became the largest mortgage lender all the way back in the second quarter of 2008 when Countrywide Financial went under during the Great Recession.

And amazingly, they had been in the top spot for over a decade before finally being dethroned, though again, it was mostly due to their correspondent lending figures.

Take the first quarter numbers – Wells did $48 billion total, with only $23 billion of it retail production (direct-to-consumer) and the remaining $25 billion via correspondent.

Given the current environment, it’s likely Wells will see even lower correspondent numbers as it scales back with its lending partners due to COVID-19.

The company has also faced a lot of issues over the past few years, including a number of fake account scandals and even a mortgage rate lock scandal.

Meanwhile, Quicken Loans has been surging higher and higher thanks to its Rocket Mortgage unit, which has proven to be highly successful with consumers.

Ultimately, Quicken has built a brand around Rocket Mortgage technology, while Wells Fargo has kind of just been the old guard, with no exciting fintech to speak of.

People seem to like the idea of pushing buttons to get a mortgage, even if you can also push buttons over at Wells Fargo.

It’s just that they haven’t taken the time and money to brand the experience, even if they use Blend to power a digital mortgage application.

Questions Remain Going Forward

  • Both Wells Fargo and Quicken Loans service lots of home loans because it’s profitable to do so
  • But Wells is a depository bank and Quicken is a nonbank
  • COVID-19 could present near-term challenges if Quicken isn’t adequately capitalized
  • Especially if they push to originate more and more loans that quickly go into forbearance

While everything appears to be on the up and up, questions remain. First off, this is just one quarter, not an entire year.

Surely it’ll be more a celebration if Quicken can beat out Wells over the course of 12 months.

There’s been a lot of back and forth between the two, so it’s definitely not out of the question for Wells to retake their crown.

However, Quicken did just have its best month in company history while Wells Fargo tightened its own underwriting guidelines.

The other issue is loan servicing. Wells Fargo is a depository banks with lots of customer deposits via checking and savings accounts.

Conversely, Quicken is a nonbank that does not rely on customer deposits to cover its large home loan servicing portfolio.

It’s clear that the CARES Act mortgage forbearance program is going to lead to a lot of missed mortgage payments.

So far there are already around 6% of all mortgages in forbearance, and that number is sure to rise.

While the government has offered some support, including only requiring servicers to make the first four missed payments, and buying loans in forbearance, it can still get very expensive in a hurry.

Financial analysts have long worried that nonbanks may not survive a situation where there’s mass default because many don’t have much capital or access to emergency lines of credit.

Quicken might be flush with cash, but as a private company no one can really say. In their push to be the dominant figure in mortgage lending, it’s a precarious game at the moment if new loans quickly sour.

So while the overall trend favors Quicken as the top lender going forward, there is some uncertainty as we wade through the coronavirus epidemic.

Overall, mortgage lenders originated $670 billion in home loans during the first quarter, down from $725 billion in the fourth quarter, but 91% higher than a year earlier.

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