Mortgage Industry Profitability Fell in 2000

Click stars to vote (left is low, right is high)

(1 votes, average: 1 out of 5)

 Loading ...

[?]
 Print This

RISMEDIA-NRRE August 2001

Industry News

Mortgage Industry Profitability Fell in 2000

Mortgage industry profitability declined in 2000 due to a drop in loan production profits, according to figures from the latest Peer Group Roundtables conducted by the Mortgage Bankers Association of America (MBA) and The STRATMOR Group. MBA is the national association representing the real estate finance industry.

Servicing returns and profits were roughly flat from 1999 to 2000. In terms of total mortgage industry profitability, the weighted average return on required equity declined to 15.8% in 2000 from 19.1% in 1999.

The decline in overall profitability was attributed to the dramatic decrease in loan production volume during the first quarter of 2000.

On the production side?including warehousing and secondary marketing operations?there was a mild recovery during the second half of the year. However, it was not enough for most lenders to generate profits for the full year; only the mega-lenders posted positive profit margins.

Pre-tax weighted average production margins dropped to 6 basis points?0.06% of the principal balance of loans produced?in 2000 from 25 basis points in 1999.

The weighted average profit margins for retail production dropped to -3 basis points in 2000 from 15 basis points in 1999. This translates into a pre-tax net loss of $37 per loan in 2000 compared with netincome of $189 per loan in 1999.

Discussion Forum

Topic	Posts	Last Poster
Effective, Fast and FREE Ways to Sell Homes on the Internet!	1	RealEstateMarketingNerdscom
Seller switched appliances	5	soldbychris
"I'm not going to give my house away."	15	Racheli
#1 Thing you MUST know about your website to make $$$$ online	1	RealEstateMarketingNerdscom
My Space Page?	6	RealEstateMarketingNerdscom
Why is acknowledging a recession a good thing???	3	ruthrbn
Role of realtor in real estate business	1	RomiSam11
A Listing and $2.00 will get you on the subway!	3	JoeCline
Online bidding for all Realtors	2	JoeCline
Yeah Right ,You Can Always Refinance	2	JoeCline

The Philosophy Embedded Within

Commentary by Scott Einbinder
RISMEDIA, May 19, 2008-Having read the 2008 Power Broker Report, I’d like to thank RISMedia for putting together such an informative document. Like all good resources, there are things to learn and apply from what we have read. Within the pages of this report rests a very important characteristic of our industry. […]