Independent Mortgage Bankers Double Q3 Profit: MBA

Brokers and loan officers with independent mortgage banks and subsidiaries saw profit margins for their loans more than double on average over the last quarter, according to the ""Mortgage Bankers Association"":http://www.mbaa.org/default.htm (MBA).

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The trade group released its findings in the Third Quarter 2011 Mortgage Bankers Performance Report, which it drummed up with production data reports from fewer than 300 companies.

The MBA reported that loan originations averaged $1,263 over the third quarter, more than a few dollars up from $575 recorded for every loan originated by bankers during the second quarter.

""Higher volume helped profitability as production costs were spread over a greater number of loans,"" ""Marina Walsh"":http://www.mbaa.org/marinawalshbio.htm, MBA's AVP of industry analysis, said in a statement.

""Third quarter production expenses dropped on a per-loan basis as volume rose, although expenses remained high by historical standards when compared to other quarters with similar volume,"" she said.

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By basis points, average production profit hovered at around 66.37 basis points over the third quarter, significantly up from 32.86 basis points recorded over the second quarter ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô a rise that the MBA called the best quarterly result since originations entered a refinancing surge over the same time last year.

Average production volume spiraled upward from $174 million at 866 loans per company over the last quarter to crest at $237 million at 1,114 loans per company over the third quarter.

""At the same time, secondary marketing income rose from $4,006 per loan in the second quarter of 2011 to $4,563 per loan in the third quarter of 2011,"" Walsh added. ""Secondary marketing gains improved as primary-secondary spreads widened in the third quarter.""

In line with higher profitability, the refinance share of originations leapt from 36 percent over the second quarter this year to 45 percent over the third quarter.

In better news for loan originators, operating expenses ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô including commissions, compensation, and equipment ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô deflated with a fall from $5,644 per loan over the second quarter this year to $5,315 per loan over the third quarter.

Personnel expense meanwhile declined from $3,561 per loan over the second quarter to $3,317 per loan over the third quarter.

The MBA said that the net cost for originations declined from $3,513 per loan over the second quarter to $3,360 over the third quarter.

FICO scores for borrowers also rose on average to 734 over the third quarter this year, up from 729 over the second quarter.