Independent mortgage banks report losses in fourth quarter of 2018

Figures contrast reported gains in the quarter prior

Independent mortgage banks report losses in fourth quarter of 2018

The Mortgage Bankers Association (MBA) found that independent mortgage banks (IMBs) and mortgage subsidiaries of chartered banks reported a net loss of $200 on each loan they originated in the fourth quarter of 2018.

According to MBA’s latest Quarterly Mortgage Bankers Performance Report, the figure is down from a reported gain of $480 per loan in the third quarter of 2018.

"Independent mortgage bankers continued to struggle in this very competitive mortgage market environment, with the average pre-tax net production income per loan reaching its lowest level since the inception of our report in 2008," said Marina Walsh, vice president of industry analysis at MBA. "Among the headwinds for mortgage bankers were lower volume, lower revenues and higher costs relative to the previous quarter."

"On the servicing side of the business, mortgage servicing right impairments resulting from December's drop in interest rates hurt profitability. Including all business lines (both production and servicing), only 44 percent of the firms in the study posted a pre-tax net financial profit in the fourth quarter."

The study also revealed that the average production volume was $440 million per company in the fourth quarter of 2018, which is down from $474 million per company in the third quarter of 2018. The volume by count per company averaged 1,799 loans in the fourth quarter, down from 1,948 loans in the third quarter.

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