Mortgage Profits Surge in First Quarter of 2009

September 17, 2009 No Comments »

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Mortgage bankers took in an average profit of $1,088 on each loan originated during the first quarter of 2009, according to the MBA’s Quarterly Mortgage Bankers Performance Report.

That’s up from a dismal $148 per loan profit back in the fourth quarter of 2008, aided largely by higher loan origination volumes.

“It is clear the refinance boom in the first quarter of 2009 contributed greatly to an increase in overall production volumes, allowing production operating expenses per loan to finally drop,” said Marina Walsh, MBA’s Associate Vice President of Industry Analysis, in a release.

“The average share of refinancings to total originations for these companies jumped to 66 percent in the first quarter, from 42 percent in the previous quarter. As a result, the average production volume for each firm was $213.9 million in the first quarter of 2009 compared to $125.6 million in the fourth quarter of 2008.”

The MBA also found that 85 percent of the firms in the study posted pre-tax financial profits in the first quarter, up from just 58 percent in the fourth quarter.

The “net cost to originate,” which includes all production operating expenses and commissions minus all fee income (excluding secondary marketing gains, capitalized servicing, servicing released premiums and warehouse interest spread) fell to $1,725 from $2,324.

Production operating expenses, which includes stuff like commissions, compensations, occupancy and equipment, also dropped to $3,738 per loan from $4,810.

The average number of loan originated by a retail loan officer climbed to 10.4 loans per month from 5.3 loans per month in the fourth quarter.

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