Independent mortgage banks and mortgage subsidiaries of chartered banks made an average profit of $2,152 on each loan they originated in the second quarter of 2012, up from $1,654 per loan in the first quarter, according to the Mortgage Bankers Association (MBA). “With the surge in production volume in the second quarter, net production profits among independent mortgage bankers increased, surpassing 100 basis points for the first time since inception of our report in 2008,” said MBA Associate Vice President of Industry Analysis Marina Walsh. “Secondary marketing gains improved by almost 14 basis points over the first quarter, the result of widening spreads between the primary and secondary markets. With the record volume, total production operating expenses also decreased by $164 per loan over the first quarter.”
Among the other key findings of MBA’s Quarterly Mortgage Bankers Performance Report are:
►In basis points, the average production profit (net production income) was 107 basis points in the second quarter, compared to 82 basis points in the first quarter.
►Average production volume was $371 million per company in the second quarter, up from $301 million per company in the first quarter. The average volume by count per company rose to 1,700 loans in the second quarter, from 1,380 in the first quarter.
►The purchase share of total originations, by dollar volume, was 48 percent in the second quarter, up from 42 percent in the first quarter. For the mortgage industry as whole, MBA estimates the purchase share at 26 percent in the second quarter of 2012, from 25 percent in the first quarter.
►Measured in basis points, secondary marketing income increased to 257 basis points in the second quarter, compared to 243 basis points in the first quarter.
►Personnel expense decreased to $3,246 per loan in the second quarter, compared to $3,350 per loan in the first quarter.
►Total production operating expenses, including commissions, compensation, occupancy and equipment, and other production expenses and corporate allocations, decreased to $5,128 per loan in the second quarter, from $5,292 in the first quarter.
►The "net cost to originate" was $3,224 in the second quarter, down from $3,413 per loan in the first quarter. The "net cost to originate" includes all production operating expenses and commissions minus all fee income, but excludes secondary marketing gains, capitalized servicing, servicing released premiums and warehouse interest spread.
►Productivity improved to 3.6 loans originated per production employee per month in the second quarter, from 3.3 in the first quarter.
►Ninety-five percent of the firms in the study posted pre-tax net financial profits in the second quarter of 2012, compared to 93 percent in the first quarter.
►Seventy-two percent of the 305 companies that reported production data for the second quarter report were independent mortgage companies.