With fewer loan set-ups and payoffs to manage than in the previous two years, the cost of mortgage servicing decreased and productivity improved in 2004, according to the Mortgage Bankers Association.The weighted average direct servicing cost dropped to $80 per loan in 2004, compared with $91 per loan in 2003. Loan servicing productivity increased to 1,188 loans serviced per employee in 2004 from 1,043 the year before. Indirect costs also improved, with mortgage servicing right amortization and writedowns (net of hedging) averaging $397 per loan, compared with a high of $511 per loan in 2003. The cost-of-servicing study, now in its seventh year, included participation from lenders that service 57% of all home loans, the MBA said. The association can be found online at http://www.mortgagebankers.org.

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