An improvement in losses tied to mortgage servicing rights helped the nation’s servicers of home loans reduce their losses during the most-recent quarter.
Independent mortgage servicers and mortgage subsidiaries of chartered banks serviced an average of 95,129 loans for $16.219 billion as of Sept. 30, 2016.
Average mortgage servicing portfolios grew from three months earlier, when the average was 90,186 residential loans that were serviced for $15.094 billion.
Portfolios also grew from a year earlier, when an average of 82,054 mortgages were serviced for $13.675 billion.
The metrics were reported by the Mortgage Bankers Association in its Quarterly Mortgage Bankers Performance Report Q3 2016, which can be accessed by the trade group’s members for $675 and by non-members for $1,125.
While a total of 223 mortgage servicers participated in the most-recent survey, comparisons between the second and third quarters were based just on the 190 companies that participated in both periods.
An average of 1,165 loans were serviced per full-time employee. Efficiency improved from 1,130 average loans serviced in the second quarter but diminished from 1,253 in the third-quarter 2015.
Net financial income at the nation’s independent mortgage servicers was less than a basis point, though that was an improvement from a negative 10 BPS in the second quarter and a negative 3 BPS in the third-quarter 2015.
Third-quarter 2016 net servicing income was a negative 1 basis point at companies that serviced more than 50,000 loans. Servicers with fewer than 2,500 loans in their portfolio earned a negative 2 BPS. The most-profitable group were firms that serviced between 2,500 and 10,000 loans: a negative 0.3 BPS.
Driving the overall improvement in earnings was
MSR valuations and hedging, which was cut to a loss of 5 BPS from 14 BPS in the previous quarter and 9 BPS in a year previous.
Personnel expenses
dipped to 6 BPS from 7 BPS and were little change from the same period in 2015.
Personnel expenses reflected 135 average full-time servicing employees, reduced from 143 in the second quarter and 129 in the third quarter of last year.
