MBA: Profitability Dives, but Servicing 'Stellar'

The profitability of mortgage bankers fell 61% on a per-loan basis in 2005 as origination costs increased by 38%, according to a Mortgage Bankers Association study, but loan servicing turned in a "stellar" performance.Profitability dropped from $657 per loan in 2004 to $258 in 2005, while origination costs increased from $1,485 per loan in 2004 to $2,049 last year, the MBA reported. "The year 2005 demonstrated the challenges that mortgage companies are still facing in 2006," said MBA vice president Jay Brinkman. "These challenges include narrowing warehouse interest spreads, lower sales productivity, and higher per-loan sales and fulfillment costs." However, servicing profits jumped from $21 per loan in 2004 to $104 last year. "The largest servicers outperformed their smaller peers both operationally and financially, with lowest cost to service and highest net servicing financial income," the MBA study says. The association can be found online at http://www.mortgagebankers.org.