Independent mortgage banks struggle again, but losses shrink markedly

More than 50% of independent mortgage companies profitable in three of last four quarters

Independent mortgage banks (IMBs) and mortgage subsidiaries of chartered banks persevered through another difficult quarter during the first three months of the year, but reported losses were much smaller in comparison to preceding periods.

That’s according to the Mortgage Bankers Association (MBA), whose Quarterly Mortgage Bankers Performance Report revealed a pre-tax net loss of $645 on each loan during the first quarter. That’s down markedly from the per-loan loss of $2,109 in the last three months of 2023.

“While the first quarter of 2024 marks the eighth consecutive quarter of net production losses, these losses were less severe than the previous two quarters,” said Marina Walsh, the MBA’s vice president of industry analysis. “In basis points, production revenue rose above the historical average and production costs declined. This led to an improvement in the production bottom line by almost 50 basis points during the quarter.”

As Walsh noted, total production revenue grew to 371 basis points in the first quarter, up from 334 bps one quarter prior. The average quarterly production revenue since the third quarter of 2008 is 347 bps.

Expenses, meanwhile, including commissions, compensation, occupancy, equipment and other costs, fell to 395 basis points, down from 407 basis points quarter over quarter. Per-loan costs still increased, from $12,485 in Q4 2023 to $12,593 in Q1 2024.

Average production volume was $384 million per company in the first quarter, up quarterly from $359 million.

Taking both production and servicing business lines into account, the share of mortgage companies that were profitable pre-tax in the first quarter inched upward to 59%. That’s up from 29% in the fourth quarter of 2023 and is the highest level in two years. The percentage of mortgage companies that posted pre-tax net profits has now exceeded 50% in three of the past four quarters.


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