Bank of America (BAC) originated $73 billion in first mortgages in the third quarter, down 24.7% from a year ago, according to a report the bank put out Thursday. According to its financial statement in the third quarter of 2009, BofA, the largest bank in the U.S. reported $95.7 billion in first mortgages for 450,000 borrowers to purchase a new home or refinance. A year later, the bank funded mortgages for 322,000 borrowers. BofA said $16.2 billion in first mortgages went to 103,000 low- and moderate-income borrowers, down 30.4% from the $23.3 billion in loans for these customers a year ago. Plummeting originations has not come solely from BofA. The Mortgage Bankers Association recently estimated originations industry-wide to fall below $1 trillion in 2011. In 2010, MBA officials expect $1.4 trillion in mortgage loans. The drop in business, according to MBA, comes from the consumer side as the job market continues to weaken. Unemployment currently stands at 9.6% with a new report due Friday. “Households remain cautious given the weak job market,” said Jay Brinkmann, MBA chief economist. “On top of that, uncertainty regarding tax rates for next year, and the potential for tax withholding to increase at the beginning of the year, lead us to forecast that consumer spending will remain weak, particularly in the first half of 2011.” Scott Sambucci, vice president of data analytics for Altos Research, said while some underwriting standards have tightened, the biggest factor is demand. “Homeownership rates are falling,” Sambucci said. “The homebuyer tax credit in 2009 and 2010 pushed whatever demand there was forward, plus structurally, there are fewer people that want or can buy a home.” The homeownership rate as measured by the Census Bureau, fell to 66.9% in the third quarter the lowest rate since 1999. Ron Dvari, CEO of New Oak Capital, an advisory and investment services provider, said a significant portion of new mortgage originations are driven by REO and short sales, and given the recent bottleneck in the foreclosure process, he isn’t surprised to see some pullback. “Furthermore, the mortgage originators are taking a harder look at where we are in real growth prospects and issues surrounding the residential markets and are being more cautious,” Dvari said. BofA originated $391.3 billion mortgages in 2009 as the country’s second largest lender. So far in 2010, the bank has originated $214 billion in mortgages. A spokesperson for the bank did not immediately reply to a request for comment. Write to Jon Prior.

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