They’re not out of the woods yet, but it’s a start: Independent mortgage banks (IMBs) and mortgage subsidiaries of chartered banks finally posted a net production profit during the second quarter, the first period in two years that didn’t end in the red.

IMBs logged a pre-tax net profit of $693 on each loan they originated, a long-awaited reversal from the $645 per loan one quarter prior, according to data from the Mortgage Bankers Association (MBA).

“Net production income was positive in the second quarter of 2024 — a welcome sign after eight consecutive quarters of net production losses,” said Marina Walsh, the MBA’s vice president of industry analysis. “With a pickup in quarterly volume, productivity and closings-to-applications pull-through, production costs dropped by about $1,800 per loan. These developments contributed to better net results, even as production revenues decreased from the previous quarter.”

Total production revenues decreased from 371 basis points in the first quarter to 347 bps in the second. That brought average quarterly production revenue from the Q3 2008 to the most recent quarter to 347 basis points.

Per loan, production revenues in the second quarter fell to $11,499 per loan, down from $11,947 per loan one quarter prior.

Per-loan costs fell to $10,806 in the second quarter from $12,593 per loan in the first. That’s still significantly elevated compared to historical norms; from the second quarter of 2008 to last quarter, production expenses averaged $7,524 per loan.

A substantially larger share of IMBs is reporting profitability than in previous quarters. Including both production and servicing lines, 78% of firms posted pre-tax net profits in the second quarter, up from 59% in the previous period.

“After two of the most challenging years in the mortgage business, many companies are seeing light at the end of the tunnel,” Walsh said.