Independent Mortgage Bank Profits Up from Previous Quarter

WASHINGTON, D.C. (June 7, 2016) – – Independent mortgage banks and mortgage subsidiaries of chartered banks reported a net gain of $825 on each loan they originated in the first quarter of 2016, up from a reported gain of $493 per loan in the fourth quarter of 2015, the Mortgage Bankers Association (MBA) reported today in its Quarterly Mortgage Bankers Performance Report.

“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,” said Marina Walsh, MBA’s Vice President of Industry Analysis. “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.”

Walsh added, “On the servicing side of the business, a drop in mortgage interest rates resulted in mortgage servicing right (MSR) impairments and hurt profitability. 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.”

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