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Productivity Picks Up as Profits Double

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Quarterly production profits doubled as the average mortgage banker funded more loans with fewer employees and the average loan originator closed more loans. But both metrics deteriorated from a year prior.

The average, U.S. mortgage banker originated 1,114 residential loans in the third quarter. That worked out to about $237 million in mortgage volume during the three-month period.

The Mortgage Bankers Association reported the statistics in its Quarterly Mortgage Bankers Performance Report Q3 2011. The production-related data were derived from 311 mortgage firms that reported operating statistics using a WebMB form. Independent lenders accounted for 72 percent of those surveyed.

Business leapt from 866 mortgages funded for $174 million per firm in the second quarter.

“Higher volume helped profitability as production costs were spread over a greater number of loans,” MBA Associate Vice President of Industry Analysis Marina Walsh said in a statement.

Volume was barely changed from the same quarter last year, when lenders closed 1,090 loans for $237 million.

Third-quarter originations worked out to 2.76 closings per production employee. Productivity increased from the three months ended June 30, when closings per employee were 2.23 loans.

But productivity deteriorated from 3.29 loans closed per employee in the third-quarter 2010.

Each sales employee closed an average of 7.8 loans per month, improving from the second quarter’s 6.0.

Including sales, fulfillment and other employees — the average firm had a staff of 170 full-time production employees. The number was 164 three months earlier and a year earlier.

The average loan spent 16 days on a warehouse line, not much changed from prior periods.

Mortgage brokers and correspondent lenders generated an average of 18 percent of third-quarter originations, and the rest was originated by retail and direct-marketing channels. Third-party share was 17 percent in the second quarter and 19 percent in the third-quarter of last year.

The average loan origination fee was $1,309, falling from more than $1,400 in the quarter-earlier and year-earlier periods. In terms of BPS, the origination fee slipped to 68 BPS from the second quarter’s 75 BPS.

Lenders earned 66 basis points on quarterly production. That was double the 33 BPS earned three months earlier but weaker than the 71 BPS earned a year earlier.

Included in the most-recent figures were 229 BPS in net secondary marketing income, climbing from the second quarter’s 210. Offsetting secondary income was a negative 166 BPS in net loan production operating income, compared to a negative 181.

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