Third Quarter Origination Profits Down 33% from Second Quarter

Independent mortgage bankers made a profit of $902 per loan in the third quarter, down 33% from the previous quarter, according to a new study by the Mortgage Bankers Association. "These are still healthy margins," said Marina Walsh, MBA associate vice president of industry analysis. But she noted that 18% of the reporting mortgage companies posted losses in the third quarter, up from 4% in the second quarter. The decline in third-quarter profitability reflects a 34% drop in loan volumes as well as refinancing volumes. The 306 reporting companies originated on average $189.8 million in home loans, down from $281 million in the second quarter. Refinancings comprised 44% of originations in the third quarter, compared to 62.3% in the previous quarter. Despite the drop in volume, the average "pull-through" rate of turning loan applications into closings was 72% in the third quarter, down only one percentage point from the second quarter. "The good news is we are not back to the third quarter of 2008," Ms. Walsh said, when 30% of the companies reported losses. A year ago, mortgage companies made only $332 per loan.