Independent Mortgage Banks Saw Profits Drop In Q4 2011

Posted by Orb Staff on April 05, 2012 No Comments
Categories : Residential Mortgage

11262_down2 Independent Mortgage Banks Saw Profits Drop In Q4 2011 Independent mortgage banks and mortgage subsidiaries of chartered banks made an average profit of $1,093 on each loan they originated in the fourth quarter of 2011, down from $1,263 per loan in the third quarter of 2011, according to the Mortgage Bankers Association's (MBA) Fourth Quarter 2011 Mortgage Bankers Performance Report. Seventy-eight percent of the firms in the study posted pre-tax net financial profits in the fourth quarter of 2011, compared to 86% in the third quarter of 2011.

‘The fourth-quarter 2011 results were mixed for mortgage bankers,’ says Marina Walsh, MBA's associate vice president of industry analysis. ‘Mortgage volume increased in the fourth quarter, driven by heavier refinancing activity, translating into higher productivity. However, net secondary marketing income dropped to $4,355 per loan in the fourth quarter from $4,563 per loan in the third quarter, lowering overall profits.’

According to the MBA report, the average production volume was $313 million per company in the fourth quarter of 2011, up from $237 million per company in the third quarter of 2011, with average loan balances increasing by about $5,000. The refinance share of total originations, by dollar volume, was 57% in the fourth quarter of 2011, compared to 45% in the third quarter of 2011. Measured in basis points (bps), secondary marketing gains decreased to 215 bps in the fourth quarter of 2011, compared to 229 bps in the third quarter of 2011.

Furthermore, personnel expense decreased to $3,226 per loan in the fourth quarter of 2011, compared to $3,317 per loan in the third quarter of 2011, due in part to the larger number of loans. Total production operating expenses – commissions, compensation, occupancy and equipment, and other production expenses and corporate allocations – dropped to $5,118 per loan in the fourth quarter of 2011, compared to $5,315 in the third quarter of 2011.

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