Mortgage Daily

Published On: July 1, 2012

Retail originators earned about 45 basis points more than their wholesale counterparts in the first quarter, according to new industry data. Credit scores on retail originations were about 7 points higher than on wholesale originations. Regardless of the origination channel, average loans closed per sales employee slipped from the final three months of last year.

The average lender originated 1,380 loans for $301 million during the first quarter, easing from 1,431 mortgages for $313 million three months earlier. Average originations were up, however, from 793 loans for $164 million in the same period last year.

However, when comparing only companies that were surveyed in both the first quarter and the fourth-quarter 2011, average originations were barely changed — inching up to 1,445 loans for $314 million from the fourth quarter’s 1,438 loans for $314 million.

The Mortgage Bankers Association outlined the findings in its Quarterly Mortgage Bankers Performance Report Q1 2012. The report, which costs $650 for MBA members and $1,000 for non-members, utilized data derived from the quarterly Mortgage Bankers Financial Reporting WebMB Form submitted by 311 small and medium-sized independent mortgage companies and subsidiaries.

There were 69 companies that originated less than $50 million, 64 that funded between $50 million and $100 million, 83 with production between $100 million and $250 million, and 95 that generated in excess of $250 million in volume.

Third-party originations by mortgage brokers and loan correspondents accounted for 19 percent of total first-mortgage activity, the same as the previous period but a little more than 18 percent in the first three months of last year.

Around 35 percent of production was government, a little higher government share than the fourth quarter’s 32 percent and a little lower than the year earlier’s 37 percent.

The report indicated that 96 percent of first-quarter activity was fixed-rate, the same as the prior period. First-quarter 2011 fixed-rate share was 93 percent.

Jumbo share has been fairly constant at around 4 percent for all three periods covered.

Average FICO scores edged up to 737 from the previous quarter’s 736 and the first-quarter of last year’s 733. Retail originators had an average FICO score of 741, while it was 733 for wholesalers.

Average loan-to-value ratios inched up to 79.4 percent from 78.1 percent and were lower than 79.6 percent a year prior.

An average of 186 production employees were on staff during the first quarter, one more than during the prior period and 21 more than the first-quarter 2011. The most-recent total included 86 sales employees and 61 fulfillment employees.

Closings per total production employees slipped to 3.34 from 3.46 loans in the fourth quarter. But productivity jumped from a year earlier, when 2.25 closings occurred per production employee.

At just the firms that were included in the current and prior surveys, closing per production employee drifted down to 3.22 loans from the fourth quarter’s 3.44 loans.

The average sales employee saw originations drop to 9.1 loans a month from the fourth quarter’s 9.8 loans. But the number was stronger than the 6.0 monthly loans per sales employee a year prior.

Total net production income grew to 82 BPS from 58 BPS in the prior report and 20 BPS a year earlier.

Retail-only originators earned 97 BPS in total net production income, versus just 52 BPS for companies with at least 75 percent of their originations generated through the wholesale channel.

At companies with less than $50 million in production, first-quarter net production income was just 72 BPS, while in jumped to 89 BPS for firms with between $50 and 100 million in production.

The net for companies of all sizes included a negative 164 BPS in net loan production operating income, 3 BPS in net interest income and 243 BPS in net secondary marketing income.

The report indicated that average loan origination fees rose to 62 BPS from 57 BPS but were less than 83 BPS in the year-earlier period.

Average correspondent and broker fee income climbed to 8 BPS from 7 BPS three months earlier and a year earlier.

The average loan spent 18 days on warehouse lines, fewer than the 20 days reported for the prior period but more than the 16 days in the same period during the prior year.

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