MBA Study Shows Losses On Originated Loans In 2007

Mortgage companies lost an average of $560 on every loan they originated last year – a drop from the $50 per loan they lost in 2006, according to the Mortgage Bankers Association's (MBA) annual cost study. While loan origination and ancillary fees grew on a per-loan basis, they did not keep pace with increases in production operating expenses, which grew 7% to $3,663 per loan.

The MBA's 2008 study is based on 2007 data of the income and expenses associated with the origination and servicing of one- to four-unit residential mortgage loans by mortgage banking companies. The study is based on a sample of 180 mortgage banking companies that originate and service loans.

Overall, the average firm in the study sample a posted pre-tax net financial income of $0.9 million in 2007 – compared to $6.4 million in 2006.

On a per-loan basis, the net cost to originate was $2,655 in 2007 – compared to $2,476 in 2006. The figure includes all origination operating costs and commissions minus all fee income, but excludes secondary marketing gains, capitalized servicing, servicing released premiums and warehouse interest spread, the MBA notes.

The full report can be purchased on the MBA's Web site.

Source: Mortgage Bankers Association


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