The annual mortgage bankers production survey indicated an average profit of $1,135 per loan originated by independent mortgage bankers and subsidiaries in 2009, an increase from $305 per loan in 2008, the Mortgage Bankers Association (MBA) reported today.

Profits rose as a result of a decrease in aggregate loan production expenses to $3,685 per loan in 2009 from $4,717 per loan in 2008. Total loan production income in 2009 dropped slightly to $4,820 per loan, from $5,023 the previous year.

Though profits differed widely by company type, the average profit was 61.3 basis points in 2009, up from 15.4 basis points in 2008. The profit for mortgage subsidiaries for banks and thrifts averaged 79.5 basis points each, with only 54.9 basis points for independent mortgage companies.

Additionally, the MBA found that 96% of firms in its study posted pre-tax net financial profits in 2009, a substantial increase from the 59% figure in 2008. The average firm posted pre-tax net financial income of $4.9 million in 2009, compared to only $700,000 the year before. Average production volume reached $933 million, compared to $500 million in 2008.

The average pull-through rate improved to 68.44 in 2009, up from 56.59%. Because loan production expenses dropped, the net cost to originate dropped to $1,628 per loan in 2009 from $2,291 in 2008. This figure includes all origination expenses and commissions minus all fee income, but excludes gains from secondary marketing, capitalized servicing, servicing release premiums, and warehouse interest spread.

The MBA reported that the combination of net marketing income and origination fees averaged 208 basis points in 2009, compared with 211 basis points in 2008.

For the third year in a row, net warehousing income dropped, falling to $116 per loan from $148 in 2008 and $175 in 2007. Furthermore, the average days in warehouse dropped to 14 days in 2009, from 15 in 2008 and 20 in 2007.

"Production profits increased in 2009 over 2008 as higher origination volumes, particularly in refinancing, reduced per-loan production expenses," said Marina Walsh, MBA's associate vice president of industry analysis.  "It was also clear bank and thrift subsidiaries had an advantage over independent mortgage companies because of lower loan officer compensation per loan and higher net interest spread due to lower warehouse funding costs and the ability to keep loans in warehouse longer."

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