MBA: Mortgage Banking Income Surged in '02

Pretax net income for the average firm in the mortgage banking industry surged to $40.4 million in 2002 from $23.2 million in 2001, according to the Mortgage Bankers Association of America.The MBA's 2003 Cost Study surveyed 193 mortgage companies to determine the income and costs associated with originating and servicing one- to four-unit residential loans. It found that net income from warehousing rose to $522 per loan in 2002 from $456 in 2001. In addition, the study found that net secondary marketing income, capitalized servicing, and servicing release premiums provided the largest contribution to the bottom line in 2002, at $1,609 per loan. Meanwhile, mortgage servicing rights amortization and impairments (net of hedging gains) accounted for $430 per loan in losses in 2002, up from $351 in 2001, according to the MBA study. "Average company profitability surged largely due to favorable warehousing interest spreads and secondary market gains," the MBA reported. "However, one downside to the high refinancing volume was in loan servicing." The MBA can be found online at http://www.mbaa.org.