First Quarter Profits Looking Up for Residential

Lenders say first-quarter profit margins are the widest they have seen in years, despite concerns that the refi wave could result in higher prepayment costs for servicers, according to a report in American Banker "If you're in a position to make loans, you're making historically wide profit margins, so this is a very good time to be in the lending business," said Tom Million, president and chief executive of Capital Markets Cooperative, Ponte Vedra Beach, Fla., a provider of secondary marketing services to banks. The big caveat, of course, is that some of these loans "could go bad," Mr. Millon said, and many lenders are "looking backward" at loans made in the third and fourth quarters with the same concern. Still, there has been a significant pricing shift since late last year that is boosting profits, especially for mega lenders and large aggregators such as Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo & Co. (See related stories on loan volumes.)