“Production profits remained favorable in the 4th quarter because of strong servicing rights valuations and secondary marketing gains,” said Marina Walsh, MBA's Associate Vice President of Industry Analysis.  “However, provision expense for repurchase demands may weaken profitability in upcoming quarters. We saw the expense provision double to over 6 basis points from the fourth quarter of 2008.”

Among the principal findings of MBA’s Quarterly Mortgage Bankers Performance Report are:

• 76 percent of the firms in the study posted pre-tax net financial profits in the fourth quarter 2009, compared to 82 percent in third quarter 2009. 

• The average production volume for each firm was $216.5 million in the fourth quarter 2009, compared to $189.6 million in the third quarter 2009.

• The share of refinancings to total originations for this sample was relatively constant at 45 percent in the fourth quarter 2009, compared to 44 percent in the third quarter 2009.

• The average pull-through (the number of closings divided by the number of loan applications) was relatively constant at 73 percent in the fourth quarter 2009 from 72 percent in the third quarter 2009.

• The "net cost to originate" rose to $2,345 per loan in the fourth quarter 2009, from $1,950 per loan in the third quarter 2009.  The "net cost to originate" includes all production operating expenses and commissions minus all fee income, but excludes secondary marketing gains, capitalized servicing, servicing released premiums and warehouse interest spread.

• Production operating expenses - commissions, compensation, occupancy and equipment, and other production expenses and corporate allocations - rose to $4,402 per loan in the fourth quarter 2009 compared to $4,376 per loan in the third quarter 2009. 

• Net warehousing income, which represents the net interest spread between the mortgage rate on a loan and the interest paid on a warehouse line of credit, was almost constant at 6.26 basis points in the fourth quarter 2009, compared to 6.67 basis points in the third quarter 2009.

MBA's Quarterly Mortgage Bankers Performance Report offers a variety of performance measures on the mortgage banking industry and is intended as a financial and operational benchmark for independent mortgage companies, bank subsidiaries and other non-depository institutions. Seventy-two percent of the 285 companies that reported production data for this report were independent companies.

There are five MBA performance report publications per year: four quarterly reports and one annual report. 

For media inquiries please contact Carolyn Kemp at (202) 557-2727 or ckemp@mortgagebankers.org.

To purchase or subscribe to the quarterly publications, call (202) 557-2830.  The reports can also be purchased on MBA's website by clicking here.

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The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 280,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation's residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,200 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA's Web site:  www.mortgagebankers.org.