WASHINGTON, DC – April 5, 2012 – (RealEstateRama) — Independent mortgage banks and mortgage subsidiaries of chartered banks made an average profit of $1,093 on each loan they originated in the fourth quarter of 2011, down from $1,263 per loan in the third quarter of 2011, according to the Mortgage Bankers Association’s (MBA) Fourth Quarter 2011 Mortgage Bankers Performance Report released today.
“The fourth quarter 2011 results were mixed for mortgage bankers,” said Marina Walsh, MBA’s Associate Vice President of Industry Analysis. “Mortgage volume increased in the fourth quarter, driven by heavier refinancing activity, translating into higher productivity. However, net secondary marketing income dropped to $4,355 per loan in the fourth quarter from $4,563 per loan in the third quarter, lowering overall profits.”
Among the other key findings of MBA’s Quarterly Mortgage Bankers Performance Report are:
• In basis points, the average production profit (net production income) was 58.49 basis points in the fourth quarter of 2011, compared to 66.37 basis points in the third quarter of 2011.
• Average production volume was $313 million per company in the fourth quarter of 2011, up from $237 million per company in the third quarter of 2011, with average loan balances increasing by about $5,000.
• The refinance share of total originations, by dollar volume, was 57 percent in the fourth quarter of 2011, compared to 45 percent in the third quarter of 2011.
• Measured in basis points, secondary marketing gains decreased to 215 basis points in the fourth quarter of 2011, compared to 229 basis points in the third quarter of 2011.
• Personnel expense decreased to $3,226 per loan in the fourth quarter of 2011, compared to $3,317 per loan in the third quarter of 2011, due in part to the larger number of loans.
• Total production operating expenses – commissions, compensation, occupancy and equipment, and other production expenses and corporate allocations – dropped to $5,118 per loan in the fourth quarter of 2011, compared to $5,315 in the third quarter of 2011.
• The “net cost to originate” was $3,324 in the fourth quarter of 2011, from $3,360 per loan in the third quarter of 2011. The “net cost to originate” includes all production operating expenses and commissions minus all fee income, but excludes secondary marketing gains, capitalized servicing, servicing released premiums and warehouse interest spread.
• 78 percent of the firms in the study posted pre-tax net financial profits in the fourth quarter of 2011, compared to 86 percent in the third quarter of 2011.
MBA’s Mortgage Bankers Performance Report series offers a variety of performance measures on the mortgage banking industry and is intended as a financial and operational benchmark for independent mortgage companies, bank subsidiaries and other non-depository institutions.
72 percent of the 300 companies that reported production data for the fourth quarter report were independent mortgage companies.
There are five performance report publications per year: four quarterly reports and one annual report.
To purchase or subscribe to the publications, call (202) 557-2879. The reports can also be purchased on MBA’s website by clicking here.
The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 280,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation’s residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,200 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA’s Web site: www.mortgagebankers.org.