'Perfect Storm' In Q4 Causes IMBs Net Production Losses – NMP Skip to main content

'Perfect Storm' In Q4 Causes IMBs Net Production Losses

Mar 18, 2024
IMBs
Associate Editor

Expenses Reach Second-Highest Level Ever Recorded, says Mortgage Bankers Association

Last year didn’t end positive for independent mortgage banks (IMBs), which along with mortgage subsidiaries of chartered banks, reported a pre-tax net loss of $2,109 on each loan originated in the fourth quarter of 2023 — the result of a 'perfect storm,'" according to the Mortgage Bankers Association.

The MBA newly released Quarterly Mortgage Bankers Performance Report indicated this was an increase from the reported loss of $1,015 per loan in the third quarter of 2023.

“The fourth quarter of 2023 was about as challenging as it could get for mortgage lenders to generate a production profit,” MBA’s Vice President of Industry Analysis Marina Walsh said. “The fourth quarter is typically the slowest pace of purchase activity for the year. This year was exacerbated by the current lack of housing inventory and mortgage rates that increased to their highest levels of the year, keeping refinancing volumes low. These factors contributed to a ‘perfect storm’ that resulted in a decline in production volume for the quarter that reached the lowest level for this report since 2014.”

Production revenues increased by five basis points, but expenses were up more than $1,000 per loan from the prior quarter, Walsh noted.

Total loan production expenses, including commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations, increased to $12,485 per loan in the fourth quarter, up from $11,441 per loan in the third quarter of 2023. 

“At the same time, productivity metrics deteriorated, suggesting that there may still be excess capacity even after substantial employee reductions over the past two years. Despite tough market conditions, some companies have been able to weather seven consecutive quarters of net production losses through cash reserves or infusions and strong servicing cash flows.”

About the author
Associate Editor
Erica Drzewiecki is an associate editor at NMP.
Published
Mar 18, 2024
Higher Mortgage Rates Shrink Purchase Demand, Expand Buyer Leverage

Pending sales fell to their lowest level since early April, but lower asking prices and reduced competition give originators more options to structure deals for qualified borrowers

Jul 31, 2026
Even Stable Public-Service Careers No Longer Guarantee Homeownership

Younger teachers, health care workers, first responders, and military households can afford median-priced homes in only a fraction of major metros

Jul 31, 2026
Buyers Gain Negotiating Power In 41 Major Housing Markets

Price cuts and longer listing times are creating opportunities for loan officers to help borrowers negotiate seller concessions, but leverage varies sharply by metro

Jul 30, 2026
Fannie Mae Purchase Volume Jumps 33% In Second Quarter

The GSE financed 201,000 home purchases, while appraisal alternatives pushed estimated borrower closing-cost savings to $3 billion

Jul 29, 2026
Second-Home Lending Grows Faster Than Primary-Home Market

Vacation-home mortgages rose 4.1% in 2025, led overwhelmingly by affluent borrowers

Jul 28, 2026
Credit Score Battle Picks Up Speed With FICO, VantageScore Gains

FICO 10T enrollment tops 70 lenders while VantageScore 4.0’s presence in TransUnion mortgage credit pulls jumps from less than 5% to roughly 30%

Jul 28, 2026