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MSRs Drive Down Mortgage Servicer Income

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Mortgage Daily

                                                 June 6, 2017

Despite growth in the size of their portfolios, mortgage servicers saw deteriorating earnings thanks to lower gains on mortgage servicing rights.

Average portfolios at independent mortgage servicers came to 84,211 loans for $13.992 billion during the first quarter of this year.

Servicing portfolios expanded from the preceding three-month period, when the average worked out to 82,230 loans for $13.932 billion.

An even more significant increase was reported versus the same quarter last year, when an average of 65,057 loans were serviced for $10.781 billion.

The
Mortgage Bankers Association provided the data to Mortgage Daily in its Quarterly Mortgage Bankers Performance Report Q1 2017, which can be purchased by MBA members for an annual subscription fee of $675 and by non-members for $1,125.

The trade group surveyed 198 independent mortgage banks and mortgage subsidiaries of chartered banks
for the most-recent report. But comparisons with the fourth-quarter 2017 were based on the 173 firms that took part in the survey during both periods.

There were an average of 1,359 loans serviced per full-time servicing employee in the latest quarter, up from 1,260 in the fourth-quarter 2016.

Total net financial income at servicers fell to 12 BPS in the first-quarter 2017 from 21 BPS the prior quarter. But income swung from a 5-basis-point loss a year prior.

The quarter-over-quarter deterioration was impacted by net gains on the valuation and hedging of mortgage servicing rights, which sank to 4 BPS from 19 BPS.

At companies that serviced between 2,500 and 10,000 loans, net financial income was 13 BPS, while it dropped to 6 BPS at firms with portfolios in excess of 50,000 loans.

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