As home loan production slowed last year, annual earnings at independent lenders sank. Factored into worse earnings were higher per-loan staffing costs.
Non-bank mortgage lenders originated an average of 6,779 home loans for $1.567 billion during the 12 months ended Dec. 31, 2014.
Business for the sector was down from 2013, when residential mortgage production averaged 7,857 loans for $1.754 billion.
The Mortgage Bankers Association outlined the findings in its Quarterly Mortgage Bankers Performance Report Q4 2014.
The report, which costs $175 for MBA members and $300 for non-members, reflects responses from 338 independent mortgage banks and mortgage subsidiaries of chartered banks.
Among the 306 lenders that participated in both the third- and fourth-quarter surveys, volume was 1,851 loans for $0.437 billion during the three months ended Dec. 31, 2014, compared to 1,863 units funded for $0.429 billion three months earlier.
Out of each 100 applications taken, 74.18 closed last year. The average pull-through rate was slightly better than 73.54 in 2013.
Average staffing was 285 full-time employees last year, one more than in 2013. The 2014 average included 123 sales employees, 102 fulfillment employees, 46 production support employees and 14 managers and directors.
Average monthly closings per production employee fell to 2.05 last year from 2.56 during 2013.
The average sales employees closed 5.1 loans per month in 2014, fewer than the 7.0 closed per month one year prior.
Last year’s average loan origination fee was 55 BPS, an increase from 50 BPS in 2013.
For just the fourth-quarter 2014, average origination fees were 52 BPS.
Fourth-quarter origination fees jumped to 86 BPS at firms that closed less than $50 million and sank to 25 BPS at companies that originated in excess of $250 million.
Based on origination channel, average fourth-quarter loan origination fees were 59 BPS at retail companies, 52 BPS at lenders with both retail and wholesale originations, and just 9 BPS at firms where at least 75 percent of business was generated through the wholesale channel.
Mortgage lenders earned an average net of 34 basis points on 2014’s production, sinking from 61 BPS the previous year.
Included in 2014’s net was a negative 238 BPS in net loan production operating income, worse than the previous year’s negative 193 BPS.
Net interest income worked out to 6 BPS, up from 3 BPS, while net secondary marketing income rose to 266 BPS from 254 BPS.
Employee expenses worked out to 207 BPS in 2014, more than the 181 BPS the previous year.
