Profit-Per-Loan Hits Record High in 2020

first_imgHome / Daily Dose / Profit-Per-Loan Hits Record High in 2020 Data Provider Black Knight to Acquire Top of Mind 2 days ago Profit-Per-Loan Hits Record High in 2020 Sign up for DS News Daily April 13, 2021 635 Views The Mortgage Bankers Association (MBA) has reported that independent mortgage banks (IMBs) and mortgage subsidiaries of chartered banks made an average profit of $4,202 on each loan originated in 2020, a $1,470 increase per loan over 2019’s totals.”The year 2020 was a banner year for the mortgage industry, despite the COVID-19 global health crisis essentially shutting down the U.S. economy in March and forcing personnel into remote work environments,” said Marina Walsh, MBA’s Vice President of Industry Analysis. “A surge in housing and mortgage demand, record-low mortgage rates, and widening credit spreads translated into soaring net production profits that reached their highest levels since the inception of MBA’s annual report in 2008.”The Annual Mortgage Bankers Performance Report found that the average production volume was $4.5 billion (16,198 loans) per company in 2020, up from $2.7 billion (10,411 loans) per company in 2019. On a repeater company basis, average production volume was $4.4 billion (15,669 loans) in 2020, up from $2.5 billion (9,430 loans) in 2019. For the mortgage industry as whole, MBA estimates production volume at $3.83 trillion in 2020—the highest annual volume ever reported—up from $2.25 trillion in 2019.Profits on the production side compensated for the servicing losses. Including both production and servicing operations, 99% of the firms posted overall pre-tax net financial profits in 2020, compared to 92% of firms in 2019 and only 69% of firms in 2018.”In early 2021, we are already seeing declines in pipeline volume—particularly refinance volume—as mortgage rates have risen in the first quarter,” said Walsh. “Also, secondary marketing income has dropped from last year’s highs, as credit spreads have tightened. Mortgage companies that can adjust quickly to changing market conditions and are able to harness still robust purchase demand are best poised for a successful 2021.”Walsh noted that the driver of production profitability in 2020 was production revenue, led by strong secondary marketing gains. Historically, production expenses drop when volume increases, but per-loan production expenses rose in 2020, as companies offered signing bonuses, incentives, overtime, and other compensation to address capacity constraints and meet mortgage demand. Furthermore, rising loan balances meant large sales commissions, often earned based on a percentage of the loan amount.Click here for more on the MBA’s Annual Mortgage Bankers Performance Report. Annual Mortgage Bankers Performance Report independent mortgage banks (IMBs) Marina Walsh Mortgage Bankers Association (MBA) 2021-04-13 Eric C. Peck Previous: Affordable Housing-Related Reforms Worth Considering Next: Caliber Sold to New Residential for $1.7 Billion Demand Propels Home Prices Upward 2 days ago The Best Markets For Residential Property Investors 2 days ago About Author: Eric C. Peck Tagged with: Annual Mortgage Bankers Performance Report independent mortgage banks (IMBs) Marina Walsh Mortgage Bankers Association (MBA) Related Articles in Daily Dose, Featured, Journal, Newscenter_img  Print This Post The Week Ahead: Nearing the Forbearance Exit 2 days ago Eric C. Peck has 20-plus years’ experience covering the mortgage industry, he most recently served as Editor-in-Chief for The Mortgage Press and National Mortgage Professional Magazine. Peck graduated from the New York Institute of Technology where he received his B.A. in Communication Arts/Media. After graduating, he began his professional career with Videography Magazine before landing in the mortgage space. Peck has edited three published books and has served as Copy Editor for Entrepreneur.com. Servicers Navigate the Post-Pandemic World 2 days ago Share Save Governmental Measures Target Expanded Access to Affordable Housing 2 days ago Demand Propels Home Prices Upward 2 days ago The Best Markets For Residential Property Investors 2 days ago Servicers Navigate the Post-Pandemic World 2 days ago Data Provider Black Knight to Acquire Top of Mind 2 days ago Governmental Measures Target Expanded Access to Affordable Housing 2 days ago Subscribelast_img read more

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