MBA report shows challenges dominated even in the strong economy
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Last year proved a tough one for independent mortgage bankers and mortgage subsidiaries of chartered banks.
The Mortgage Bankers Association’s annual report on the performance of these entities reveals that profit fell from an average $711 per loan originated in 2017 to just $367 in 2018.
Marina Walsh, MBA's Vice President of Industry Analysis, says there was the perfect storm for mortgage companies last year of “lower production revenues combined with rising expenses, which together contributed to the lowest net production income per loan since 2008.”
Production revenues per loan dropped despite study-high loan balances in 2018 ($251,084). At the same time, production expenses per loan grew to a study-high of $8,278 per loan last year.
Better news for MSR
Net servicing financial income, which includes net servicing operational income, as well as mortgage servicing right (MSR) amortization and gains and losses on MSR valuations, was $203 per loan in 2018, up from $64 per loan in 2017.
"For those holding mortgage servicing rights it was the silver lining that boosted overall profitability. Including both production and servicing operations, 69% of the firms posted overall pre-tax net financial profits in 2018, compared to only 47% of firms with net servicing income excluded," added Walsh.
Average production volume was $2.0 billion (8,171 loans) per company in 2018, down from $2.13 billion (8,882 loans) per company in 2017.
On a repeater company basis, average production volume was $2.07 billion (8,502 loans) in 2018, down from $2.11 billion (8,824 loans) in 2017.
For the mortgage industry as whole, MBA estimates production volume at $1.64 trillion in 2018,
