Independent Mortgage Bankers See Lowest Per-Loan Profit Since ’08

Profits for independent mortgage bankers are falling sharply according to quarterly findings released this week by the Mortgage Bankers Association.

The average profit per loan among independent mortgage banks and subsidiaries of chartered banks was $150 in the fourth quarter of 2013, down from $743 for the third quarter, MBA reported.

“Fourth-quarter production profits were at their lowest levels since inception of the Performance Report in 2008, driven by study-high costs in a declining mortgage market,” said Marina Walsh, MBA’s Vice President of Industry Analysis in a press release.

Mortgage servicers saw an uptick in profit; but marked the sole upside to the market during the quarter, Walsh said.

“One consolation was in mortgage servicing, where financial income improved. However, not all mortgage companies retained mortgage servicing rights or generated margins large enough to offset production losses. It is perhaps not surprising that only 58 percent of participating companies had overall positive pre-tax profits in the quarter.”

Total loan production expenses rose during the quarter to $6,959 per loan, up from $6,368 in the prior quarter with personnel expenses and net cost to originate also on the rise.

Productivity fell from 2.5 loans per month per originator in the third quarter to 2 loans per month in the fourth quarter.

Written by Elizabeth Ecker

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