Servicers of residential mortgages earned less per loan during the final three months of 2011 even though they handled more loans per employee, according to a survey of smaller mortgage servicers. Average servicing portfolios grew on a quarter-over-quarter basis, but there has been a contraction on a year-over-year basis.
An average of 34,505 mortgages was serviced for $5.286 billion per servicer in the fourth quarter of last year.
Three months earlier the average portfolio was 31,329 loans for $4.709 billion, while it was 44,799 loans for $7.027 billion a year earlier.
The Mortgage Bankers Association reported the findings in its Quarterly Mortgage Bankers Performance Report Q4 2011. The report costs $650 for MBA members and $1,100 for non-members.
There were 170 servicers surveyed for the study, more than the 162 that participated in the prior report and the 159 participants in the fourth-quarter 2010 study. The surveyed firms represented less than 10 percent of all servicers and excluded mega-servicers like Bank of America Home Loans and JPMorgan Chase & Co.
Using dollar volume and excluding sub-servicing, government mortgages made up 21 percent of the average servicing portfolio. Prime conventional mortgages accounted for 63 percent.
Closed-end second mortgages and home-equity lines of credit represented less than 1 percent of the average servicing portfolio.
Almost 10 percent of the first-mortgage portion of the portfolios was adjustable-rate mortgages, while the interest-only share was 3 percent and the non-owner occupied share was 9 percent.
More than 87 percent of servicing portfolios were serviced for investors, with the agency servicing share at 72 percent.
Home loans serviced per full-time employee, including sub-servicing, worked out to 967, improving from 869 average loans serviced per employee in the third quarter and 955 mortgages per employee in the final quarter of 2010.
The average firm had 84 full-time employees, while the average cost of each employee was $58,166.
Mortgage servicers had $466 in direct revenues per loan during the fourth quarter, while direct expenses were $222 per loan. That left fourth-quarter direct servicing net income at $244, less than $264 in the prior quarter and $288 in same quarter during the prior year.
Servicing net income was only $58 per loan for firms that serviced less than a thousand loans, while it rose to $296 for servicers with portfolios between 1,000 and 5,000. Larger servicers, those that serviced more than 50,000 loans, earned $266 per loan.
However, the lower net income for the larger servicers was the result of more special servicers being among the group that services more than 50,000 loans, according to Marina Walsh, MBA’s associate vice president of industry analysis.
The special servicing factor was reflected in the serious delinquency rate, which was 19.04 percent for companies servicing more than 50,000 loans versus just 2.13 percent for those with portfolios between 1,000 and 5,000 mortgages.
