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Independent Mortgage Banks Recorded a Profitable Second Quarter

Phil Hall
Aug 29, 2017
Distressed home sales accounted for 12.5 percent of all residential sales activity in the third quarter, according to new figures released by ATTOM Data Solutions

New data released by the Mortgage Bankers Association (MBA) has determined that independent mortgage banks and mortgage subsidiaries of chartered banks enjoyed a net gain of $1,122 on each loan they originated in the second quarter, a substantial increase from a reported gain of $224 per loan in the first quarter.
During the second quarter, the MBA reported, average production volume was $526 million per company, up from $455 million per company in the first quarter. The volume by count per company averaged 2,177 loans in the second quarter, up from 1,944 loans in the first quarter of 2017. The average loan balance for first mortgages was $248,619 in the second quarter, up from $242,949 in the first quarter. And the average pre-tax production profit was 46 basis points (bps) in the second quarter, up from an average net production profit of 10 bps in the first quarter.
However, total loan production expenses—commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations—fell to $7,774 per loan in the second quarter, from $8,887 in the first quarter. And net servicing financial income was $27 per loan in the second quarter, down from $225 per loan in the first quarter.
“Production profitability improved in the second quarter as volume picked up with the Spring home buying season and a slight drop in mortgage rates,” said Marina Walsh, MBA’s Vice President of Industry Analysis. “Production revenues declined due to increased competition, but that was more than offset by per loan expenses dropping to levels comparable with other recent quarters of similar volume. While profits were up in the second quarter compared to the first quarter of 2017, they lagged the second quarter profits of 2015 and 2016 given the movement away from refinances towards a purchase market.”

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