NMP - December 2016 - 37
economic growth and hurts
The trade groups that created
the letter to the Senate leaders
are the Consumer Bankers
Association, the Credit Union
National Associations, the
Independent Bankers Association
of America and the National
Association of Federal Credit
Banks Report Net Gains
Non-Profits Fault FHFA
on Housing Goals
A coalition of 21 consumer
advocacy groups and civil rights
organizations sent a letter to Mel
Watt, director of the Federal
Housing Finance Agency (FHFA),
and Treasury Secretary Jacob Lew
regarding the governmentsponsored enterprises' (GSEs)
Single Family Housing Goals
performance and whether this
creates new limits on low- and
"FHFA's upcoming 2017
Scorecard must target a greater
level of average-cost pricing and
lower the rate of return on capital
being reflected in the pricing at
both Enterprises," the letter stated.
"Quite simply, the Enterprises'
average guarantee fees are too
high. The differences between
capital and fees on the
Enterprises' loans across the credit
score spectrum and for various
continued on page 67
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n National Mortgage Professional Magazine n DECEMBER 2016
Independent mortgage banks and
mortgage subsidiaries of chartered
banks reported a net gain of
$1,773 on each loan they
originated in Q3 of 2016, up from
a reported gain of $1,686 per loan
in Q2 of 2016, the Mortgage
Bankers Association (MBA)
reported in its Quarterly Mortgage
Bankers Performance Report.
"Including all business lines, 94
percent of mortgage lenders in our
study reported pre-tax net
financial profits in the third quarter
of 2016, compared to 90 percent
in the second quarter of 2016,"
said Marina Walsh, MBA's vice
president of Industry Analysis. An
increase in production volume and
slight decrease in expenses in the
third quarter kept production
profits relatively stable. These
profits would have been even
higher were it not for a decline in
net secondary marketing income,
primarily income related to
mortgage servicing rights."
Average production volume was
$764 million per company in the
third quarter of 2016, up from
$654 million per company in the
second quarter of 2016. The
volume by count per company
averaged 3,072 loans in the third
quarter of 2016, up from 2,721
loans in the second quarter of
The average pre-tax production
profit was 74 basis points (bps) in
the third quarter of 2016,
compared to an average net
production profit of 73 bps in the
second quarter of 2016.
Production profits for the third
quarter of 2016 are also up from
production profits of 55 bps in the
third quarter of 2015. Since the
inception of the Performance
Report in the third quarter of 2008,
net production income has
averaged 53 bps.
"For the first time since the
second quarter of 2015,
production expenses were below
$7,000 per loan, at $6,969 per
loan," said Walsh. "However,
these expenses remain elevated
by historical standards. Given
the increase in loan count and
the higher pull-through rate
compared to the second quarter,
we would have expected an
even larger reduction in
production expenses. Loan
balances continued their upward
march and reached another
study-high of $247,563, which
helped keep production revenue
per loan relatively flat despite a
revenue drop in basis points
from the previous quarter."
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