Even though volumes rose in the fourth quarter of 2012, independent mortgage bankers saw their average profits per loan fall during this time period.
According to the Mortgage Bankers Association’s quarterly mortgage bankers performance report, in which 311 companies reported data, independent mortgage banks and mortgage subsidiaries of chartered banks made an average profit of $2,256 on each loan they originated in 4Q 2012, down from $2,465 per loan in the previous quarter.
During the fourth quarter, average production volume was $488 million per company, up from $450 in 3Q, and volume by count rose to 2,132 loans, an increase of 122 loans on a quarterly basis.
Marina Walsh, associate vice president of industry analysis for the
Additionally, personnel expenses per loan were higher in 4Q compared to 3Q, now costing $3,570 per loan with the largest increase being for fulfillment personnel expense, which rose $119 to $858 in the fourth quarter.
Also, the “net cost to originate” was $3,813 in 4Q compared to only $3,353 the prior quarter. 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.
“Historically, production costs have dropped with rising volume. In this quarter, however, despite high origination volumes, per-loan costs reached the highest levels we have seen in this study, other than during the first half of 2011, when origination volume was 60% lower,” Walsh added.
Other highlights from the report include that 3.8 loans were originated by an employee per month in the fourth quarter, down from 3.9 in 3Q, and fulfillment productivity also declined quarter-over-quarter from 10.9 loans to 10.2 loans.
Also, 94% of the firms in the study posted pretax net financial profits in the fourth quarter, a 3% drop from the previous quarter.
