- theMReport.com - https://themreport.com -

Independent Mortgage Banker Profits Decreased in Q1

Independent mortgage bankers' profits declined since the last quarter of 2020—still, the most recent numbers show a record-breaking Q1.

The Mortgage Bankers Association's (MBA) newly released Quarterly Mortgage Bankers Performance Report [1] for this year’s first quarter shows a decrease in profits for independent mortgage banks (IMBs) as well as mortgage subsidiaries of chartered banks—said entities reported a net gain of $3,361 on each loan they originated in the first quarter of 2021, according to. That is down from a reported gain of $3,738 per loan in the fourth quarter of 2020.

"Despite dropping slightly from the fourth quarter of 2020, net production profits reached their highest level for any first quarter since the inception of MBA's report in 2008," said Marina Walsh, CMB, MBA's VP of Industry Analysis. "Triple-digit basis-point profitability was seen for the fourth consecutive quarter—another record that surpasses the 2012 boom generated from the Home Affordable Refinance Program (HARP)."

Added Walsh, "Average production volume was also down from the previous quarter, but was still at the highest level for any first quarter, as average loan balances continued their upward trajectory. Production revenues dropped again after peaking in the third quarter of 2020, and while production expenses rose slightly, the pace flattened from the previous two quarters."

There were more substantial improvements in net servicing financial profits, thanks to a recovery in the valuation of mortgage servicing rights (MSRs), Walsh said. Combining both production and servicing operations, 97% of firms posted overall profitability for Q1 2021.

For the purposes of this report, 83% of the 366 companies that reported production data for the first quarter of 2021 were independent mortgage companies, and the remaining 17% were subsidiaries and other non-depository institutions.

The following are a few takeaways from the report, which can be accessed in full at MBA.org: [1]