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MBA: Origination Profits Rise 15%; 97% of Firms Are Profitable

DEC 13, 2012 10:06am ET
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It’s no secret that residential funders are making money hand-over-fist these days, but a new study from the Mortgage Bankers Association notes that origination profits per loan rose 15% in the third quarter to $2,465 on each unit.

The comparison is to the second quarter.

The study, a regular quarterly exercise for the trade group, focuses on independent mortgage banking firms, including nonbanks, and subsidiaries of certain depositories.

An MBA spokesman noted that “no megabanks are represented here.”

Although profits per origination are up, so are certain costs. Loan production expenses, which include commissions and compensation, increased to $5,163 in 3Q from $5,128.

Personnel costs rose to $3,320 per loan from $3,246, the trade group found.

Larry Charbonneau, who runs a small advisory firm in Texas, has been saying all year long that the industry is enjoying some of the best profit margins he’s ever seen.

Bob Garrett, a warehouse executive at First Tennessee Bank, told National Mortgage News recently that, “Mortgage bankers are doing very well right now. Everyone is having a great year.”

MBA says that 97% of the lenders it surveyed had pre-tax profits in 3Q compared to 95% in the second quarter.

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