Quarterly profits fell at the nation’s mortgage bankers as originations declined, production expenses rose and lenders grappled with new integrated disclosures.
The average independent mortgage banking firm originated 2,320 residential
loans for a total of $0.551 billion during the three months that ended on Dec. 31, 2015.
Business receded from 2,803 mortgages closed for $0.660 billion three months earlier but strengthened from 1,769 loans funded for $0.417 billion a year earlier.
The Mortgage Bankers Association reported the statistics in its Quarterly Mortgage Bankers Performance Report Q4 2015 provided to Mortgage Daily.
In all, 334 independent mortgage bankers and mortgage subsidiaries of banks participated in the latest report, though third- and fourth-quarter 2015 findings were based only on the 312 firms that participated in both periods.
Average full-year 2015 volume came to 9,853 loans for $2.392 billion, substantially stronger than the 6,779 average home loans originated for $1.567 billion during all of 2014.
Headcount averaged 358 in the final quarter of last year, 10 more employees than in the prior period and 52 more people than in the year-earlier period.
Average monthly closings per production employee worked out to 2.31 in the latest period, slipping from 2.38 in the third quarter.
Average loans originated each month per sales employee
worked out to 7.0 units, slightly more than the 6.6 average as of three months earlier and 6.1 units a year earlier.
Fourth-quarter 2015 average production per sales employee soared to 9.5 loans closed per month at companies with more than $0.250 billion in quarterly originations and sank to 4.6 loans at firms with less than $0.050 billion in volume.
Mortgages spent an average of 19 days on warehouse lines, no different than in prior periods.
Origination fees averaged 43 basis points, better than 39 BPS in the third quarter but not as good as 52 BPS in the fourth-quarter 2014.
Fourth-quarter 2015 average origination fees jumped to 57 BPS at mortgage bankers that closed less than $0.050 billion during the three-month period and fell to 32 BPS
at lenders with more than $0.250 billion in production.
Including correspondent fees, broker fees and other origination-related income, total origination-related income was 69 BPS in the latest period.
Home lenders earned a net average of 22 basis points on each loan originated during the fourth-quarter 2015, sinking from 56
BPS in the previous period and thinning from 32 BPS in the year-earlier period.
Net production income during the latest period was highest at home lenders with more than $0.250 billion in production: 27 BPS. Firms with between $0.050 billion and $0.100 billion earned the least, at just 8 BPS.
Purely retail originators earned 28 BPS in net production income during the fourth-quarter 2015. Companies that
originate both through the retail and wholesale channels had 11 BPS in net production income, while it was 17 BPS at companies with at least 75 percent of their business generated through the wholesale channel.
“With the Know Before You Owe rule going into effect last Oct. 3 and declining production volume compared to the third quarter of 2015, mortgage bankers saw their total loan production expenses climb to $7,747 per loan, from $7,080 per loan in the third quarter,” MBA Vice President of Industry Analysis Marina Walsh explained in an accompanying announcement.
Loan production expense rose to 341 BPS from 303 BPS in the third quarter.
Much of the increased expenses was with personnel expenses, which climbed to 226 BPS from 202 BPS. This often happens as loan originations fall faster than staff is reduced.
In addition, occupancy and equipment was up 4 BPS,
other direct expenses increased 7 BPS, other operating expenses were up 4 BPS and corporate allocation worsened by 3 BPS. Many of these expenses also rise as volume diminishes.
“The fourth quarter marked the second highest level of production expenses per loan since the inception of our report in the third quarter of 2008,” Walsh said.
She added that there was more to the increase than just volume fluctuations.
