Mortgage banker profits edge up post-TRID, but still lag behind last year

by Ryan Smith08 Jun 2016
Mortgage banker profits were up in the first quarter from the previous quarter, signaling that the industry is starting to recover from the initial hit of the TRID rules. However, profit was still down year over year, according to new data from the Mortgage Bankers Association.

Independent mortgage banks and mortgage subsidiaries of chartered banks saw a net gain of $825 on each loan they originated in the first quarter, according to the MBA. That’s up from a gain of $493 per loan in the fourth quarter of 2015. But production profits were down from the first quarter of 2015, according to Marina Walsh, MBA’s vice president of industry analysis.

“Production profits in the first quarter of 2016 showed modest improvement over the fourth quarter of 2015 despite declining volume and an increase in per-loan production expenses,” Walsh said. “Compensating for the cost increases were higher production revenues that grew by $431 per loan (16 basis points) over the fourth quarter. However, on a year-over-year basis, production profits were still down. In the first quarter of 2016, profits were $825 per loan (33 basis points), compared to $1,447 per loan (60 basis points) in the first quarter of 2015.

“On the servicing side of the business, a drop in mortgage interest rates resulted in mortgage servicing right impairments and hurt profitability,” Walsh added. “Net servicing financial income dropped to a loss of $118 per loan serviced in the first quarter, from gains of $107 per loan in the fourth quarter.”

More key findings from the MBA’s Quarterly Mortgage Bankers Performance Report included:
  • Average production volume was $517 million per company in the first quarter, down from $538 million in the fourth quarter of 2015. The volume count averaged 2,196 loans per company in the first quarter, down from 2,265 in the fourth quarter.
  • The purchase share of total originations was 61% by dollar volume in Q1. That’s down from 66% in the fourth quarter of 2015. The MBA estimated the purchase share for the mortgage industry as a whole at 53% in the first quarter.


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