After
This marks six consecutive quarters of originations being in the red, and given expected volume trends, in the short-term more losses are likely.
IMBs lost an average of $1,015 — or 34 basis points — on each loan originated, an increase from $534 per loan (18 basis points) in the second quarter and $624 (20 basis points)
"A decline in originations volume worsened net production losses in the third quarter of 2023," said Marina Walsh, the MBA's vice president of industry analysis. "While production revenues stayed relatively flat, per-loan production costs reverted to the third-highest level in the history of MBA's survey, which reversed a portion of the cost improvements made in the second quarter."
Reiterating what she said
Servicing rights portfolios are what is making the difference between profits and losses at some nonbanks.
"Combining both the production and servicing business lines, roughly half of mortgage companies stayed profitable in the third quarter of 2023," said Walsh. "Were it not for mortgage servicing, only about one in three companies would have been profitable."
But the 51% share that said they made money in the last quarter was down from 58% in the second quarter.
While per loan production revenue was just $84 dollars lower from the prior quarter, $10,426 versus $10,510, expenses grew by $397, to $11,441 from $11,044.
The historic average for expenses is $7,305 per loan, starting with the third quarter of 2008.
On servicing activities, IMBs reported net financial income for the third quarter (without annualizing) of $90 per loan, down from $94 in the second quarter. That number includes amortization,
Without those items, servicing operating income was $104 per loan in the third quarter, down from $105 in the second quarter.