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Mortgage Banking Profits Dive 44% in 2013

nosediveSkyrocketing costs brought per-loan profits at mortgage banks down by nearly half over the course of 2013 compared to 2012.

According to the Mortgage Bankers Association (MBA), independent mortgage banks and mortgage subsidiaries of chartered banks earned an average $1,242 on each loan originated in 2013, down 43.5 percent from $2,199 the previous year.

MBA's VP of industry analysis, Marina Walsh, called 2013 net production profits "respectable," even with the massive decline.

"In fact, they were the second highest recorded since [the] inception of the Performance Report in 2008," Walsh said.

At the same time, she noted that net production profits throughout the year's second half were substantially lower than in the first half, owing in large part to per-loan production expenses, which climbed to an average $6,539 in the latter part of the year compared to $5,743 earlier on.

For the whole year, per-loan costs averaged $5,948, including commissions, compensation, occupancy, and other expenses. In 2012, per-loan expenses averaged $5,137.

MBA's performance report did show some positives, at least for servicers: Net servicing income per loan last year was $257, nearly ten times that of 2012.

Including all business lines, MBA reports 91 percent of firms in its study posted pre-tax net financial profits in 2013, down from 97 percent in 2012. In the second half of the year alone, only 69 percent reported profits, down more than a quarter from the first half.


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