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Independent mortgage bankers and their subsidiaries made an average profit of $1,135 on each loan they originated in 2009, compared to $305 per loan in 2008, the Mortgage Bankers Association (MBA) reported Tuesday.
[IMAGE]MBA says the steep increase was driven by a drop in loan production expenses, which fell from $4,717 per loan in 2008 to $3,685 last year. At the same time, however, loan production income declined, though not as sharply. Income slipped from $5,023 per loan in 2008 to $4,820 in 2009.
The average profit was 61.3 basis points in 2009, up from 15.4 basis points in 2008, but differed widely by company type. Profit for bank and thrifts' mortgage subsidiaries
[COLUMN_BREAK]averaged 79.5 basis points per loan last year, but only 54.9 basis points for independent mortgage companies.
""Production profits increased in 2009 over 2008 as higher origination volumes, particularly in refinancing, reduced per-loan production expenses,"" said Marina Walsh, MBA's AVP of industry analysis.
Walsh added, ""It was also clear bank and thrift subsidiaries had an advantage over independent mortgage companies because of lower loan officer compensation per loan and higher net interest spread due to lower warehouse funding costs and the ability to keep loans in warehouse longer.""
For the third straight year, net warehousing income â€" or the net interest spread between the mortgage rate on a loan and the interest paid on a warehouse line of credit â€" dropped. It was $116 per loan in 2009, down from $148 per loan in 2008 and $175 per loan in 2007.
Likewise, the average days in warehouse dropped to 14 days in 2009, from 15 days in 2008 and 20 days in 2007.
MBA's analysis shows that the average production volume among independent mortgage bankers and subsidiaries was $933 million in 2009, compared to $500 million in 2008.
Pull-through rate, or the number of loan closings to number of loan applications, also improved, from 56.59 percent in 2008 to 68.44 percent in 2009.
