Independent mortgage banking firms earned an average profit of $917 per loan originated in the second quarter, a 51% increase from the first quarter as production volumes increased and personnel costs fell.

But according to Marina Walsh, associate vice president of industry analysis for the Mortgage Bankers Association, lenders may've been too careful on the cost side of the business. "As things ramped up they may not have had enough personnel on hand to handle the volume," she said in an interview with National Mortgage News.

"Things are still volatile in the industry," she added. The trade group released its second quarter Mortgage Bankers Performance Report early Tuesday morning.

The improvement in profitability came despite a somewhat meager 7% increase in loan originations from 1Q to 2Q. (The production volume number was calculated by NMN and the Quarterly data Report and reflects the entire mortgage industry, not just the MBA sample.)

And although the profit increase on a sequential basis looks impressive, compared to the same quarter last year, origination profitability per loan fell by 32%.

MBA's findings are based on a survey of 312 mortgage banking firms – 70% of which are nondepositories. The balance represents affiliates of banks or hedge funds.

The origination profitability numbers exclude residential loans funded by most of the nation's megabanks, including Bank of America, Wells Fargo, JPMorgan Chase, and other top 10 ranked firms.

Walsh noted that 80% of the origination volume cited in its study was retail based. "A lot of these firms sell to the big guys," she said.

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.