Independent
mortgage
banks
(IMBs)
as
a
group
expanded
their
profitability
in
the
third
quarter
of
2024.
But
fewer
companies
recorded
profits
compared
to
the
previous
quarter,
despite
a
brief
dip
in

mortgage
rates.

According
to
the Mortgage
Bankers
Association
(MBA),
IMBs
and
mortgage
subsidiaries
of
chartered
banks
reported
an
average
pretax
net
profit
of
$701
per
loan
in
Q3
2024,

up
from
$693
in
Q2.
But
only
71%
of
companies
in
the
MBA
survey
reported
a
profit
across
their
origination
and
servicing
lines,
a
decrease
from
78%
in
the
prior
quarter.

“Mortgage
companies
reported
net
production
profits
for
the
second
consecutive
quarter
after
an
unprecedented
period
of
net
production
losses
that
spanned
two
years,”
Marina
Walsh,
the
MBA’s
vice
president
of
industry
analysis,
said
in
a
statement.

In
late
October,
Walsh
told
the
crowd
at

MBA
Annual
in
Denver
that
industry
production
and
expense
management
moves
enacted
in
the
second
quarter
remained
consistent
in
the
third
quarter.
She
expected
most
companies
to
be
profitable
in
Q3. 

A
total
of
345
companies
provided
production
data
for
the
third
quarter.
IMBs
represented
82%
of
the
respondents
with
the
remaining
18%
being
mortgage
subsidiaries
or
nondepository
institutions.

Total
production
revenue
—
which
includes
fee
income,
net
secondary
marketing
income
and
warehouse
spread
—
decreased
slightly
to
341
basis
points
(bps)
in
Q3,
down
from
347
bps
in
Q2.
On
a
per-loan
basis,
revenue
fell
from
$11,499
in
Q2
to
$11,417
in
Q3.

Meanwhile,
total
loan
production
expenses
(including
commissions,
compensation,
occupancy,
equipment
and
other
corporate
allocations)
dropped
from
330
bps
to
323
bps
during
the
period.
This
lowered
per-loan
expenses
to
$10,716
in
Q3,
down
from
$10,806
in
Q2,
but
this
figure
is
still
well
above
the
average
cost
of
$7,573
observed
since
mid-2008.

Operating
income
from
servicing,
excluding
mortgage
servicing
rights
(MSR)
amortization,
valuation
adjustments,
and
gains
and
losses
on
MSR
bulk
sales,
rose
from
$88
to
$93
per
loan
during
the
third
quarter.

The
sale
of

MSRs
does
not
directly
impact
company

earnings
as
a
revenue
stream,
but
the
conversion
of
MSRs
into
cash
via
sales
bolsters
a
lender’s
cash
flow
and
overall
liquidity.
MSR
markdowns
in
a
declining
mortgage
rate
environment
can
also
affect
a
company’s
profitability. 

Average
production
volume
per
company
increased
to
$542
million
(or
1,642
loans)
in
Q3
2024,
up
from
$492
million
(or
1,503
loans)
in
Q2.
Purchase
loans
made
up
84%
of
total
volume.

Looking
forward,
the
MBA
expects
the
mortgage
origination
market
to
improve
by
28.5%
in
2025,
reaching

$2.3
trillion
in
volume.

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