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Be Nice to Your Friendly Neighborhood Mortgage Banker ...

Posted by: Peter Coy on October 10, 2006

… because your friendly neighborhood mortgage banker is making a lot less money these days. That’s according to a recently released study by the Mortgage Bankers Association. High points:

—In 2004, mortgage banking production profits were $657 per loan.
—By 2005, they had fallen to $258 per loan.
—Numbers for 2006 aren’t in yet (duh), but the association has reason to believe that profits haven’t exactly leapt back up. “The year 2005 demonstrated the challenges that mortgage companies are still facing in 2006,” Jay Brinkmann, the vice-president for research and economics, said in a press release.
—The average loan officer made 83 loans in 2005, which was down 9% from 2004 and down 41% from the 2003 peak.
—The flattening of the yield curve squeezed lending profits. Lenders had to pay almost as much for their warehouse line of credit as they received from loan customers. So-called “net warehousing income” fell to $294 per loan from $481 per loan in 2004.
—The place where mortgage bankers make their money is post-loan servicing. “Net secondary marketing income, which also includes capitalized servicing and servicing released premiums, averaged $2,012 per loan in 2005,” the association said.



BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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