Mortgage loan production suffered among independent mortgage bankers throughout the third quarter--but servicing revenues are helping to ease the pain for those with portfolios, Richey May & Co. revealed in its latest quarterly trend report.
The survey was put together using Richey May Select, the advisory company's analytical technology designed to provide benchmarking information taken exclusively from independent mortgage firms, a group rapidly gaining market share.
Among independent companies, overall production fell 12.4 percent quarter-over-quarter, owing largely to a 42 percent decline in refinances, Richey May reported. (According to origination data gathered by technology provider Ellie Mae, refinance share averaged 44 percent throughout the quarter.)
Loan margins also fell, dropping 42 basis points compared to Q2.
Overall, net income declined 60 basis points from the second quarter, though a 0.07 percent increase in the average value of servicing portfolios helped offset losses at those with servicing interests, Richey May reported.
"Servicing is definitely playing a role in offsetting the declines in origination volume," said Ken Richey, managing partner at Richey May. ""Some lenders have sold portions of their servicing portfolios to compensate for decreases in production and profitability. Others are incorporating servicing as part of their business models, which can be a good option for lenders that can handle the cash flow constraints that are typical of mortgage servicing.""
Among other findings: Richey May observed some easing in credit standards, with the share of borrowers with FICO scores less than 700 increasing to 30 percent in Q3.