Quarterly originations improved, third-party share widened and secondary marketing income was better at mortgage origination firms — though operating income worsened, a new trade group report said. At mortgage servicing firms, loans serviced per employee improved even as the average portfolio size was down by more than half from a year earlier.
Those were the findings from the fourth-quarter Quarterly Mortgage Bankers Performance Report – Revenue, Cost and Volume Statistics for Non-Depository Institutions released today by the Mortgage Bankers Association. The report reflects average results for 307 reporting companies, including 285 that originate and 157 that service.
The association said the study of revenues and expenses tied to the origination and servicing of one- to four-unit residential loans is used as a benchmark for small- and mid-sized independent mortgage banking firms.
Average originations during the fourth quarter were 1,086 loans for $216 million, higher than 962 loans for $190 million three months earlier. Independent mortgage bankers originated just 649 loans for $126 million in the fourth-quarter 2008.
Monthly production worked out to 3.79 loans per employees, higher than 3.53 the prior quarter and 2.80 the prior year. The share of third-party originations on just first mortgages edged up to 21.89 percent from 18.95 percent the previous year.
First mortgages with FICOs between 601 and 650 accounted for 11 percent of fourth-quarter 2009 originations, a smaller share than 15 percent a year earlier. During the same period, the proportion of borrowers with credit scores higher than 750 has risen to 41 percent from 32 percent.
The average firm had 140 full-time production employees in the fourth quarter, higher than 132 in the prior period and 112 a year prior.
Net operating income from loan production was a negative 122 basis points, worse than -100 BPS in the third quarter but better than -123 BPS in the fourth-quarter 2008. Net interest income fell to 6 BPS from 7 BPS in the previous quarter and 9 BPS a year prior.
Secondary marketing income, however, jumped to 164 BPS from the third quarter’s 143 BPS and the fourth-quarter 2008’s 129 BPS.
Mortgage servicers, meanwhile, serviced an average of 74,316 loans for $10.3 billion in the latest period, down from 80,862 loans for $10.4 billion in the prior period. The decline was huge when compared to 166,151 mortgages serviced for $24.6 billion in the fourth-quarter 2008.
An MBA spokeswoman explained that three “very large servicers” were dropped from the survey. The three firms had been skewing the average servicing portfolio size.
MBA said 787 loans were serviced for each full-time servicing employee, better than 688 in the previous quarter and 730 a year prior.
Net servicing operating income rose to $193 per loan from $183 three months earlier and $164 a year earlier. But total net servicing financial income fell to $37 from the third quarter’s $41 — though it was better than the negative $139 a year previous.
The spokeswoman noted that per-loan numbers weren’t significantly impacted by the loss of the three servicers from the survey.