Independent mortgage banks report higher loan profits in 2Q

Independent mortgage banks reported higher profits on mortgages originated in the second quarter, an industry trade group said Tuesday. The Mortgage Bankers Association said in its second-quarter 2011 Mortgage Bankers Performance Report that profits on loans averaged $575 per mortgage in the second quarter, up from $346 per loan in the first quarter. The average production volume per company also rose from $164 million in 1Q to $174 million in 2Q. Refinancings made up 36% of total loan originations in the period, compared to 50% in the first quarter. The MBA said its estimate for overall quarterly industry origination volume hit $290 billion, down from $302 billion in the first quarter. The average loan balance held relatively steady at $197,039, up slightly from $196,456 in 1Q. “Contrary to overall MBA industry data in which estimated production volume declined, the average firm in our study of independents and subsidiaries experienced volume growth,” said Marina Walsh, MBA associate vice president of industry analysis. “The firms in our study were able to more quickly adjust to a purchase-focused mortgage market environment after a significantly refi-heavy fourth quarter of 2010.” The share of originations tied to the government grew to 41%, up from 37% in 1Q. Meanwhile, the average FICO scores fell to 729 in 2Q, compared to 733 in the first quarter and 737 in the fourth quarter of 2010. Independent mortgage originators during the period saw their personnel expenses dip slightly to $3,561 per loan, compared to $3,640 in 1Q, while total production operating expenses fell to $5,644 per loan compared to $5,837 in 1Q. About 70% of the originators posted pre-tax net financial profits in 2Q, which is up from 63% in 1Q. Write to: Kerri Panchuk.