Even though quarterly originations at independent lenders have fallen by nearly a third over the past year, staffing has increased — driving loan production income into the red.
First-quarter 2014 loan originations at independent mortgage companies and subsidiaries of banks, thrifts and non-depository institutions averaged 1,395 loans for $308 million.
Home loan production tumbled from the fourth-quarter 2013, when average residential fundings worked out to 1,684 units for $378 million.
Business sank compared to the year-earlier period, when an average of 1,954 loans were closed for $442 million.
The performance metrics were detailed in the Quarterly Mortgage Bankers Performance Report Q1 2014 from the Mortgage Bankers Association.
Although there were 331 companies that participated in the latest survey, the current and prior period numbers reflect only activity from the 301 lenders that provided information for both the first-quarter and previous quarter. But first-quarter 2013 data reflects activity at all survey participants.
Less than one first mortgage, on average, was originated for portfolio during the three months ended March 31, 2014.
Monthly production per sales employee fell to 4.4 loans from 5.2 loans and plunged from 9.0 loans in the first-quarter 2013.
Sales employees at mortgage bankers with less than $50 million in production closed an average of 3.7 loans per month, while sales employees at entities with more than $250 million in production closed an average of 5.3 loans per month.
At companies that originate primarily through the wholesale channel, an average of 9.3 loans was closed per sales employee.
Based on total production staffing, per-employee production was 1.6 loans in the first-quarter 2014.
Average origination fees were 53.3 basis points, slipping from 56.2 BPS in the fourth-quarter 2013. Originations fees were better, however, than 48.8 BPS a year earlier.
But at firms that closed less than $50 million during the first quarter, origination fees jumped to 82.9 BPS, while the number dropped to 31.1 BPS for lenders that generate more than $250 million in production.
Correspondent and broker fee income averaged 6.0 BPS, less than 6.7 BPS three months earlier and 6.1 BPS a year earlier.
Mortgage bankers earned an average of 5.8 BPS on warehouse activities, down from 5.9 BPS in the fourth quarter but well above just 0.6 BPS in the first-quarter 2013. Average time on the warehouse line was 18 days for the current and prior periods.
Although average originations have tumbled more than 30 percent from the first quarter of last year to the first quarter of 2014, the average number of employees increased to 278 from 251 — pushing human resource expense up to 235.1 BPS from 173.6 BPS in the year-earlier period.
Net production income, which was 10.3 basis points in the previous report, turned negative at a loss of 5.9 BPS. One year prior, mortgage bankers were earning 86.5 BPS on loan production.
Much of the 92.4-basis-point year-over-year deterioration was attributable to the 61.6-basis-point increase in personnel costs.
`First-quarter 2014 net production income was a negative 4.5 BPS at the biggest originators, while it was a negative 31.5 BPS at the smallest firms. But companies with quarterly originations of between $100 million and $250 million garnered a positive 10.3 BPS in total net production income.
Net production income at retail lenders was a negative 1.8 BPS, while companies that generate at least three-quarters of their business through the wholesale channel netted a negative 2.5 BPS.
At lenders that originate through both the retail and wholesale channels, losses were a whopping 24.5 BPS.
