Industry News

Mortgage bankers take $50 hit on each loan originated in 2006

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Mortgage bankers lost an average of $50 for each loan they originated in 2006, as they failed to cut costs and match staffing to match declining originations, a new study by the Mortgage Bankers Association reveals. The MBA's annual cost study, which surveys of a sample of 189 mortgage banking companies, said production profits plummeted from $1,272 per loan in 2003 to $258 in 2005, before dipping into negative territory last year. During that period, loan officer productivity fell from 141 retail loans closed per year in 2003 to an average of 62 in 2006. That helped push the net cost of originating a loan from $739 in 2003 to $2,746 last year, the study found. "The continued increase in production operating expenses is an indication of the difficulty in matching costs, particularly personnel costs, with declining volumes," the study concluded. After peaking in 2003 at $3.8 trillion, purchase and refinance mortgage originations declined to $2.8 trillion in 2006, the MBA...