As residential loan originations at independent mortgage bankers moved higher, production earnings swung back into the black. But originations and earnings fell short of a year earlier.
Average origination fees on home loans were 54.16 basis points in the second quarter, diminishing from 54.60 BPS three months earlier.
But loan originators have lifted their revenues from the second-quarter 2013, when average originations fees were just 51.45 BPS.
The Mortgage Bankers Association reported the data in its Quarterly Mortgage Bankers Performance Report Q2 2014. While 349 firms participated in the latest survey, the quarter-over-quarter comparisons reflect just the 311 firms that participated in both surveys.
Average origination fees jumped to 83 BPS for firms with less than $0.050 billion in quarterly volume and tumbled to 28 BPS for lenders with more than $0.250 billion in volume per quarter.
Total net production income swung to a 47-basis-point profit from an 8-basis-point first quarter loss.
“The gains seen in the second quarter come after first quarter losses that were likely triggered by a variety of factors including the implementation of new Dodd-Frank regulations and extremely low origination volumes,” MBA Vice President of Industry Analysis Marina Walsh said in a written statement. “Some loan closings may have been pushed into the second quarter, resulting in an increase in profitability as per-loan production costs declined.”
But profits plummeted from 75 BPS earned in the second-quarter 2013.
Second-quarter 2014 net production income was highest at 55 BPS for retail-only shops, while it tumbled to less than 33 BPS for lenders that derive any originations from the wholesale channel.
Profits were comprised of 91 BPS in origination-related income and 320 BPS in expenses. Covering the difference were 6 BPS in warehouse net interest income and 270 BPS in secondary marketing income
Average residential production at independent mortgage bankers was 1,776 loans for $0.403 billion during the three months ended June 30.
Business improved from the first quarter, when those very same 311 lenders closed an average of 1,295 units for $0.287 billion.
Mortgage production was down from the second-quarter 2013, a period that saw an average of 1,921 loans originated for $0.439 billion.
Out of an average of 280 full-time employees, 119 were sales employees, 101 were fulfillment employees, 46 were production support employees and 14 were managers and directors.
Each month, the average sales employee closed 6.2 loans, more than the 4.2 average in the first quarter. Productivity was down, however, from 7.6 loans in the same three-month period last year.
