MBA Study Finds Production Profits Up In 2009

ndent mortgage bankers and subsidiaries made an average profit of $1,135 on each loan they originated in 2009, compared to $305 per loan in 2008, according to the Mortgage Bankers Association (MBA)'s Annual 2009 Mortgage Bankers Production Survey. According to the survey, a drop in total loan production expenses drove the increase to $3,685 per loan in 2009 from $4,717 per loan in 2008. Total loan production income dropped slightly to $4,820 per loan in 2009 from $5,023 per loan in 2008. The average profit was 61.3 basis points (bps) in 2009, up from 15.4 bps in 2008, but differed widely by company type. The profit for mortgage subsidiaries for bank and thrifts averaged 79.5 bps per loan but only 54.9 bps for independent mortgage companies. Furthermore, 96% of the firms in the study posted pre-tax net financial profits in 2009, versus just 59% in 2008. The average firm posted pre-tax net financial income of $4.9 million in 2009, compared to $700,000 in 2008, while the average production volume for each firm was $933 million in 2009, compared to $500 million in 2008. Also, the average pull-through rate improved to 68.44% in 2009, up from 56.59% in 2008. ‘Production profits increased in 2009 over 2008 as higher origination volumes, particularly in refinancing, reduced per-loan production expenses,’ says Marina Walsh, associate vice president of industry analysis. ‘It was also clear bank and thrift subsidiaries had an advantage over independent mortgage companies because of lower loan officer compensation per loan and higher net-interest spread due to lower warehouse funding costs and the ability to keep loans in warehouse longer.’ The study also determined that for the third straight year, net warehousing income dropped to $116 per loan in 2009, down from $148 per loan in 2008 and $175 per loan in 2007. Likewise, the average days in warehouse dropped to 14 days in 2009 from 15 days in 2008 and 20 days in 2007. SOURCE: Mortgage Bankers Asso


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