Magazine article Mortgage Banking

Mortgage Banking Profits Slip in Third Quarter

Magazine article Mortgage Banking

Mortgage Banking Profits Slip in Third Quarter

Article excerpt

The good news is that independent mortgage banking firms were profitable in the third quarter of 2009. The bad news is they weren't quite as profitable as they were in the second quarter of last year. Those were some of the findings in the Quarterly Mortgage Bankers Performance Report released in mid-December by the Mortgage Bankers Association.

Independent mortgage bankers and subsidiaries earned an average profit per loan of $902 in last year's third quarter, according to the report. In the second quarter, profits per loan originated averaged $1,358.

Marina Walsh, MBA associate vice president of industry analysis, said, "For lenders in our study, average production volume dropped 33 percent in the third quarter 2009, along with a drop in the refinancing share of total originations. The overall decline in production volume combined with a heavier purchase share resulted in higher per-loan production expenses, which pulled down production profits."

The average production volume for firms in the study was $189.6 million in the third quarter. That was down from $280.9 million in last year's second quarter. The share of refinancings for participating lenders dropped to 44 percent in the third quarter, which was sharply lower than the 62 percent refi share in the second quarter.

Still, 82 percent of firms in the study showed pre-tax net financial profits during the third quarter of 2009. That was down from the 96 percent posting such profits in the second quarter.

Pull-through rates were relatively constant during the two reporting periods, averaging 72 percent in last year's third quarter compared with 73 percent in the second quarter. …

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