Despite a doubling of repurchase reserves, secondary marketing profits were higher last year. Profitability with warehouse lending, however, deteriorated.
Secondary marketing income — including the gain or loss on the sale of loans in the secondary market, pricing subsidies and overages, and capitalized servicing and servicing released premiums — were $2,647 per loan during 2009, according to a survey of 219 firms announced today by the Mortgage Bankers Association.
Secondary market income was $2,448 per loan in 2008.
In terms of basis points, secondary earnings per loan worked out to 136 BPS last year versus 128 BPS a year earlier.
Repurchase reserve expense more than doubled to $97 from $46 in 2008, or to 4.39 BPS from 2.04 BPS.
Lenders saw the net interest spread on warehoused loans decline for the third consecutive year to $116 per loan from 2008’s $148, while the average days loans were held on warehouse lines fell to 14 in 2009 from 15 the prior year.
A decline in warehousing expenses, to 14 BPS from 19 BPS, was wiped out by a bigger drop in warehousing income, to 20 BPS from 25 BPS.
MBA Associate Vice President of Industry Analysis Marina Walsh noted in the report that mortgage lending subsidiaries of banks and thrifts had an advantage over independent mortgage companies because of higher net interest spread as a result of lower warehouse funding costs. Another advantage was their ability to hold their loans on warehouse lines-of-credit longer.
