Loan Volume, Profits Decline at Independent Mortgage Bankers

Profits and loan volume declined at independent mortgage bankers in the first quarter of the year, the ""Mortgage Bankers Association"":http://www.mortgagebankers.org/default.htm reported.

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Independent mortgage banks and mortgage subsidiaries of chartered banks took in an average profit of $1,772 on each loan they originated in Q1, down from $2,256 per loan in Q4 2012.

Meanwhile, total production expenses, including commissions, compensation, occupancy and equipment, and other expenses and corporate allocations, increased to $5,779 per loan, up from $5,603. Personnel expenses averaged $3,785 per loan, up from $3,570 in the fourth quarter of 2012.

The net cost to originate also rose, climbing to $4,182 from $3,813 in the previous quarter. That cost includes all production operating expenses and commissions minus all fee income but excludes secondary marketing gains, capitalized servicing, servicing released premiums and warehouse interest spread.

On the production side, average volume was $442 million per company in Q1, down $46 million from the prior quarter. The average volume count per company was also down, falling from 2,132 loans to 1,954.

""The average firm's production volume dropped about 10 percent in the first quarter. On a per-loan basis, the combination of lower revenues and rising costs resulted in lower profits compared to the previous three quarters,"" said Marina Walsh, associate VP of industry analysis at MBA. ""Nonetheless, the margins remain strong in comparison to other quarters since 2008.""

The refinancing share of total originations (by dollar volume) was 60 percent, down slightly from the fourth quarter. For the mortgage industry as a whole, MBA estimates the refinancing share at 74 percent in Q1.

Production employees originated an average of 3.1 loans per month in the first quarter. Fulfillment productivity was 8.6 loans originated per fulfillment employee per month, down from 10.2 in Q4.