IMBs almost tripled their net gain per loan in the second quarter


Independent mortgage banks and mortgage subsidiaries of chartered banks reported a net gain of $ 4,548 on every loan they took in the second quarter of 2020, almost triple the average gain of $ 1,600 per loan in the first quarter. quarter, according to a report by Mortgage Bankers Association.

Average production volume fell from $ 728 million per company in the first quarter to an average of $ 1.02 billion per company in the second quarter.

In the first quarter, production volume declined slightly, most likely due to the high volatility in the housing market in March triggered by the COVID-19 pandemic. However, fueled by increased demand from borrowers and record mortgage rates, second-quarter mortgage production profits hit their highest level since the report’s inception in 2008, said Marina Walsh, vice president of the company. industry analysis at MBA.

According to Walsh, the second quarter saw an ideal combination of higher revenues coupled with lower costs. On a per loan basis, production income increased to $ 11,686 per loan in the second quarter from $ 9,582 per loan in the first quarter, while total loan production expenses – commissions, compensation, occupancy, equipment and other production expenses and business allowances – fell from $ 7,982 per loan in the first quarter to $ 7,138 per loan in the second quarter, according to the report.

The average success rate (loan closings on application) fell from 67% in the first quarter to 71% in the second quarter – a steady return to pre-pandemic levels when the average success rate was 78% in the fourth trimester. .

With median home prices rising in 96% of subways in the second quarter, the average first mortgage balance also rose to a new high of $ 282,309 in the second quarter, from $ 276,291 in the first. trimester.

“The profitability of services took a hit in the last quarter. Reductions and amortization of mortgage management rights (MSR) continued, and there was a loss of management income due to high default activity. Despite these service losses, 96% of the companies in the report posted overall profitability for the second quarter, ”Walsh said.

Before the pandemic, the service of net financial income for the fourth quarter (without annualization) was $ 0 per loan. The first quarter saw a steep loss of $ 171 per loan, but that number fell back to a loss of $ 68 per loan in the second quarter, according to the report.

According to the report, 82% of the 348 companies that reported production data for the second quarter of 2020 were independent mortgage companies, and the remaining 19% were subsidiaries and other non-depository institutions.

June 24, Consumer Financial Protection Bureau released its annual report on the Home Mortgage Disclosure Act data which found that IMBs were responsible for 54.5% of all loans reported for 2019, a significant increase from 2008, the year in which MBA began to report on IMBs, and when they only accounted for 24% of the mortgage issuance share.

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