If your mortgage banking employer isn’t making money hand-over-fist then there’s something terribly wrong.
That’s the word from warehouse lending advisor and M&A consultant Larry Charbonneau who’s been in the business for three decades. “The mortgage bankers that I’ve looked at are making more money than ever before,” Charbonneau said in an interview with National Mortgage News. “It’s the most lucrative business a man could want to be in.”
Charbonneau, who heads the Spring, Texas-based Charbonneau & Associates, said mortgage bankers that sell directly to the agencies (Fannie Mae, Freddie Mac) or securitize through the Government National Mortgage Association are making 75 to 100 basis points more in profits than they would selling to an aggregator such as Wells Fargo & Co.
Among other chores, Charbonneau audits lenders on behalf of warehouse banks.
It’s no secret that with the cost of funds at rock bottom levels mortgage funders are making huge profits – on reduced volumes no less. The key is secondary market gains.
Last week the Mortgage Bankers Association released a report saying that independent lenders funding residential loans earned an average profit of $1,654 on each transaction in the first quarter, a stunning 51% increase in profitability from 4Q 2011.
