Mortgage Banker Production Volumes, Profits and Per Loan Costs All Higher in 3Q

by devteam December 16th, 2010 | Share

Whilernorigination costs increased again in the third quarter, independent mortgagernbanks and subsidiaries saw a substantial increase in per-loan profits duringrnthe same period. </p

The Mortgage BankersrnAssociation’s 3rd Quarter 2010 Mortgage Bankers Performance reportrnstates that bankers saw profits increase from $917 per loan in the secondrnquarter to an average of $1,423 in the third quarter. rnBetter profits were generated by increased secondary marketing gains (gain on sale) which rose torn$4,069 per loan compared to $3,455 a quarter earlier.</p

Lowrninterest rate-driven refinancing brought the volume of loans up to an averagernof $237 million per month from $197 million in the second quarter, but thisrnhigher volume did not translate, as it usually does, to a lower cost tornoriginate each loan.  According to MarinarnWalsh, MBA’s Associate Vice President of Industry Analysis, stricter lendingrnstandards increased direct loan production expenses to $4,539 from $4,438 perrnloan.  </p

307 companies responded tornthe survey, 215 of which were in the residential production business.  The average number of loans originated byrneach of the respondents was 1,090 during the quarter, 57 percent of which were forrnrefinancing.  In the previous quarterrnrespondents originated an average of 982 loans, 35 percent of which werernrefinancings.  The average size of a loanrnincreased from $196,596 in the second quarter to $237,385 in the third.  One year earlier the average number of loansrnwas 962 with a 44 percent share for refinancing and the average loan size wasrn$189,573. </p

Revenuesrnfrom origination fees, and other origination-related income averaged $2,082 perrnloan, up $16 from Q2 but down from $2,426 one year earlier.  Personnel expenses rose slightly to $3,034 perrnloan in the third quarter of 2010, compared to $3,017 in the second quarter ofrn2010.  In the third quarter 2009, personnel expenses averaged $2,770 perrnloan.  Net cost to originate whichrnexcludes secondary marketing gains, capitalized servicing, servicing releasedrnpremiums, and warehouse interest spread increased to $2,720 per loan from $2,611rnin the second quarter. </p

The average pull-throughrn(the number of closings divided by the number of loan applications) was down torn68 percent from 72 percent in the second quarter of 2010, as lenders struggledrnto close the higher volume of refinance applications received.  </p

Productivity improvedrnslightly, with sales employees generating 10.4 closings per month compared torn9.3 in both the second quarter and one year earlier. Companies employed anrnaverage of 79 sales employees and 156 FTE employees.</p

88 percent of thernfirms in the study posted pre-tax net financial profits in the third quarter ofrn2010, compared to 85 percent in the second quarter of 2010 and 82 percent inrnthe third quarter of 2009.</p

Over 70 percent of the 307rncompanies that reported production data for this report were independentrnmortgage companies.</p

One hundred sixty-one ofrnthe responding companies were involved in loan servicing.  The average portfolio serviced was 45,796rnloans compared to 47,627 in the second quarter and 80,862 a year earlier.   The dollar value of the average portfoliornwas $7.038 billion, down from $7.088 billion in Quarter Two and $10.3744rnbillion in the third quarter of 2009. Net servicing income per loan was $216rncompared to $213 in Quarter Two and $183 in the third quarter of 2009.

All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of is prohibited.

About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

See all blogs


Leave a Comment

Leave a Reply

Latest Articles

Real Estate Investors Skip Paying Loans While Raising Billions

By John Gittelsohn August 24, 2020, 4:00 AM PDT Some of the largest real estate investors are walking away from Read More...

Late-Stage Delinquencies are Surging

Aug 21 2020, 11:59AM Like the report from Black Knight earlier today, the second quarter National Delinquency Survey from the Read More...

Published by the Federal Reserve Bank of San Francisco

It was recently published by the Federal Reserve Bank of San Francisco, which is about as official as you can Read More...