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MBA Study Shows Mortgage Banker Production Profits Dropped in 1st Quarter of 2010

WASHINGTON, DC (July 20, 2010) – (LoanSafe.org) – Independent mortgage bankers and subsidiaries made an average profit of $606 on each loan they originated in the first quarter of 2010, down from $890 per loan in the fourth quarter of 2009 and $1,088 in the first quarter of 2009, according to the Mortgage Bankers Association (MBA)’s 1st Quarter 2010 Mortgage Bankers Production Survey released today.   

The decline was driven by a drop in the average production volume for each firm to $157.8 million in the first quarter of 2010, compared to $216.5 million in the fourth quarter of 2009. In addition, production operating expenses rose to $5,147 per loan in the first quarter 2010 compared to $4,402 per loan in the fourth quarter of 2009.

“It is extremely difficult for mortgage companies to effectively manage staffing levels.  Either companies are stretching to meet the incredible demand, or they are carrying excess capacity which drives up per-loan personnel expense,” said Marina Walsh, MBA’s Associate Vice President of Industry Analysis. “Despite this challenge as originations declined in the first quarter, the independents and bank subsidiaries still produced an average of thirty two basis points of production profit, primarily resulting from higher secondary marketing gains.”

Among the additional key findings of MBA’s Quarterly Mortgage Bankers Performance Report are:

• Total personnel expense rose to $3,296 per loan in the first quarter 2010, compared to $2,756 per loan in the fourth quarter 2009.

• The “net cost to originate” rose to $2,945 per loan in the first quarter of 2010, from $2,345 per loan in the fourth quarter of 2009.  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.

• Retail sales productivity dropped to five loans per month per sales employee in the first quarter 2010, compared to seven loans per month per sales employee in the fourth quarter 2009.

• The average pull-through (the number of closings divided by the number of loan applications) was 68 percent in the first quarter of 2010, compared to 73 percent in the fourth quarter 2009.

• Net secondary marketing gains (excluding origination fees) averaged $3,464 per loan in the first quarter 2010, compared to $3,110 in the fourth quarter 2009.

• 75 percent of the firms in the study posted pre-tax net financial profits in the first quarter 2010, compared to 76 percent in the fourth quarter of 2009.

MBA’s Mortgage Bankers Performance Report offers a variety of performance measures on the mortgage banking industry and is intended as a financial and operational benchmark for independent mortgage companies, bank subsidiaries and other non-depository institutions.

Over 70 percent of the 295 companies that reported production data for this report were independent mortgage companies.

There are five performance report publications per year: four quarterly reports and one annual report.

For media inquiries please contact Carolyn Kemp at (202) 557-2727 or ckemp@mortgagebankers.org.


The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 280,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation’s residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,200 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA’s Web site:  www.mortgagebankers.org.

Source: MBA

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