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Servicer Earnings Tumble

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An analysis of performance by small and medium-sized mortgage servicers indicated that quarterly servicing income deteriorated by 87 basis points. While the share of government mortgages in servicing portfolios was higher, government loans still account for a relatively small portion of outstanding U.S. mortgages.

The average residential loan servicer had a portfolio of 47,627 mortgages for $7.1 billion in the second quarter, according to the Quarterly Mortgage Bankers Performance Report released Tuesday by the Mortgage Bankers Association. The report covered revenues and expenses tied to servicing residential loans at small- to mid-sized independent mortgage companies and subsidiaries.

Data were obtained from 161 servicers through a joint agreement with Fannie Mae and Freddie Mac.

The average portfolio edged up from 47,568 loans for $7.1 billion three months earlier. A year earlier, the average servicing portfolio was 77,674 loans for $10.4 billion.

An MBA spokeswoman explained that the year-over-year decline reflected the removal of companies from the analysis that serviced more than 1 million loans.

Government mortgages accounted for 17 percent of first-mortgage servicing portfolios in the latest period, rising from 14 percent a year earlier.

Third-party servicing accounted for 85 percent of servicing portfolios, including a nearly two-thirds share for agency loans. The third-party share was 82 percent in the second-quarter 2009.

Second-quarter delinquency of at least 90 days on first mortgages, including loans in foreclosure, was 5.74 percent, lower than 6.20 percent the prior quarter and 5.84 percent at the same time last year.

Servicers covered in the latest report employed 127 full-time employees, more than 121 in the first quarter but lower than 164 a year earlier.

Average loans serviced per full-time servicing employee was 799, deteriorating from the first quarter’s 854 but improving from just 680 in the second-quarter 2009. Servicers paid an average of $56,030 in compensation per full-time employee.

Total net servicing financial income was 14 BPS, down from 101 BPS in the previous quarter and 41 BPS at the same time last year. The total reflected 213 BPS in second-quarter net servicing operating income, higher than 197 BPS the previous quarter and 165 BPS in 2009.

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