Profits of independent mortgage banks
and mortgage subsidiaries of chartered banks rose by more than $300 per loan in
the third quarter of 2012 the Mortgage Bankers Association (MBA) said
today. Increased volumes of applications
for both purchasing and refinancing and secondary market gains resulted in an
average profit of $2,465 on each loan originated in the quarter compared to $2,152
in the second quarter.
In basis points, the average production profit
(net production income) was 120 basis points in the third quarter, compared to
107 basis points in the second quarter. Secondary marketing income increased to
271 basis points in the third quarter, compared to 257 basis points in the
There was only a small increase in total loan
production expenses, from $5,128 in the second quarter to $5,163 in the
third. Total production expenses include
commissions, compensation, occupancy and equipment, and other production
expenses and corporate allocations. Personnel
expenses averaged $3,320 per loan in the third quarter, up from $3,246 per loan
in the second quarter.
The "net cost to originate" was $3,353
in the third quarter, from $3,224 per loan in the second quarter. The "net
cost to originate" includes all total production operating expenses minus
all fee income, but excludes secondary marketing gains, capitalized servicing,
servicing released premiums and warehouse interest spread.
volume was $450 million per company compared to $371 million in the second
quarter. Companies originated an average
of 2,010 loans, 310 more than the average in the second quarter. Productivity
improved to 3.9 loans originated per production employee per month in the third
quarter, from 3.6 in the second quarter.
The refinancing accounted for 57 percent of the
dollar volume of total originations in the third quarter, up from 52 percent in
the second quarter. For the mortgage industry as whole, MBA estimates the
refinancing share at 73 percent in the third quarter of 2012, up from 67
percent in the second quarter.
There were 311 companies
reporting production data for the third quarter 70 percent of which were
independent mortgage companies.
Ninety-seven percent posted pre-tax net financial profits in the third
quarter of 2012, compared to 95 percent in the second quarter.