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Costs and Profits Rise for Mortgage Originators: MBA

Costs are rising for mortgage originators, but they are still seeing a rise in profit, according to a recent ""study"":http://www.mortgagebankers.org/NewsandMedia/PressCenter/81225.htm of independent mortgage banks and mortgage subsidiaries of chartered banks conducted by the ""Mortgage Bankers Association (MBA)."":http://www.mortgagebankers.org/default.htm

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The average profit per loan origination for these originators rose from $1,093 in the fourth quarter of last year to $1,654 in the first quarter of this year, according to the MBA.

The net cost of originating a mortgage loan in the first quarter of this year was $3,413. When calculating net cost, MBA weighs production and operating expenses and commissions against fee income, excluding factors such as secondary marketing gains, capitalized servicing, warehouse interest spread, and servicing released premiums.

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The net cost of origination per loan in the fourth quarter of last year was $3,324.

Personnel costs also rose over the quarter from $3,226 in the fourth quarter of last year to $3,350 in the first quarter of this year.

Secondary marketing income also rose in the first quarter of this year, rising from $4,355 per loan in the fourth quarter of last year to $5,011 per loan in the first quarter of this year.

The average production volume per company dropped during the first quarter, according to the MBA, falling from $313 million in the fourth quarter of 2011 to $301 million in the first quarter of this year.

""Independent mortgage bankers remained focused on purchase production while many larger banking institutions were handling significantly more refinancing activity,"" said Marina Walsh, associate VP of industry analysis at the MBA.

Refinances made up 58 percent of mortgage loan originations in the first quarter of this year, measured by dollar volume, according to the MBA. This is up one percentage point from the previous quarter.

However, for the entire mortgage industry, including chartered banks, the MBA estimates refinances made up about 75 percent of loan originations in the first quarter of this year, down from 78 percent in the previous quarter.

About Author: Krista Franks Brock

Krista Franks Brock is a professional writer and editor who has covered the mortgage banking and default servicing sectors since 2011. Previously, she served as managing editor of DS News and Southern Distinction, a regional lifestyle publication. Her work has appeared in a variety of print and online publications, including Consumers Digest, Dallas Style and Design, DS News and DSNews.com, MReport and theMReport.com. She holds degrees in journalism and art from the University of Georgia.
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