A lot has happened in our industry over the last two quarters. Several common company names in the market place are no longer with us, Fannie and Freddie have tightened guidelines, legislators are looking to originators for answers, and the media is looking to place blame. While these things are not good, good things can and will come from them. The pendulum will swing toward more prudent underwriting guidelines, some of the bad apples will leave our industry, and the borrowing public will be served by more professional and regulated lenders.

Christy Allison, Countrywide Home Loans, Davenport
Linda Bessey, Community Savings Bank, Manchester
Teresa Carley-Brown, Riverbend Home Mortgage, Bettendorf
John Cook, Valley Bank, Davenport
Todd Darland, First Horizon Home Loans, West Des Moines
John Doellinger, First Federal Bank, Sioux City
Dana Goodmiller, Riverbend Home Mortgage, Moline
Kathy Klahn, Clinton National Bank, Clinton
Nyla Krulik, Valley Bank, Bettendorf
Brian Lampe, Countrywide Home Loans, Clive
Lesa Lewis, First Federal Savings Bank of Iowa, Fort Dodge
Amber Lampe, Valley Bank, Clive
Becki Rogers-Neese, Wells Fargo Bank, Davenport
Deb Sullivan, Valley Bank, Davenport
Amber Stumpf, Investco Mortgage Company, Johnston
Tammy Walton, Iowa Savings Bank, Des Moines

The purpose of the ICMP is:
To distinguish individuals with illustrated accomplishments in the mortgage profession.
To build the standards of the mortgage industry to gain strength in our practices.
To acknowledge past accomplishments and contributions to other organizations.
To identify an individual's knowledge, understanding, and competency in the real estate finance community.
To empower qualified persons to continue their training in the professional field.
To foster a foundation for future leaders in the mortgage industry.

The program, called Guaranteed Underwriting System (GUS), is available to all lenders in Iowa who write housing loans in communities of less than 20,000 residents.

GUS dramatically speeds the traditional manual underwriting processes for Rural Development's guaranteed housing loan program by automating application and credit-decision recommendations. Pre-qualification of loan applications is now determined in a matter of seconds.

Automation is also applied to property and adjusted-income eligibility determinations which now appear in seconds.

"Improving the speed and consistency at which lenders pre-qualify and process loan applications is an important step in helping qualified applicants become homeowners," said Mark Reisinger, USDA Rural Development State Director in Iowa.

Last year, Rural Development assisted more than 1,300 Iowa families in becoming homeowners. Each year the agency invests around $100 million in loans and grants that provide rural Iowa residents with decent, safe and sanitary single and multi-family housing.

"Production profits began to slip in 2004, and we see a continuation of this trend in 2006," said Marina Walsh, a senior director in MBA's research and economics department. "Despite some companies’ best efforts to boost production revenues through the origination of higher-yielding mortgage products, several factors worked against the industry as a whole - the negative yield curve which increased the cost of funds, lower sales productivity and higher per-loan sales and fulfillment costs, particularly personnel-related costs. Servicing profits in 2006 partially offset production losses, but even these profits declined from 2005 levels due to mortgage servicing hedge losses.”

MBA's 2007 Cost Study is based on 2006 data and is the twenty ninth in an annual series of reports on the income and expenses associated with the origination and servicing of one- to four-unit residential mortgage loans by mortgage banking companies. The study is based on a sample of 189 mortgage banking companies who originate and service loans, and originated an estimated 54 percent of total residential volume in 2006 and serviced an estimated 48 percent of home mortgage debt outstanding.

Study highlights include:

• Overall, the average firm posted pre-tax net financial income of $6.4 million in 2006, compared to $26 million in 2005.
• Retail sales productivity averaged 62 loans per loan officer in 2006, compared to 83 loans per loan officer in 2005.
• On a per loan basis, the net "cost to originate" increased to $2,476 in 2006 compared to $2,049 per loan in 2005. The “net cost to originate” includes all origination operating costs and commissions minus all fee income, but excludes secondary marketing gains, capitalized servicing, servicing released premiums and warehouse interest spread.
• Net warehousing income, which represents the net interest spread between the mortgage rate on a loan and the interest rate paid on a warehouse line of credit, dropped to $245 per loan from $294 per loan in 2005 and $481 per loan in 2004, due to the flat yield curve.
• Net marketing income, which includes the gain or loss on the sale of loans in the secondary market, pricing subsidies and overages, as well as capitalized servicing and servicing released premiums, averaged $2,180 per loan in 2006 compared to $2,012 per loan in 2005.
• Servicing financial profits per loan serviced declined by 44 percent, primarily because of mortgage servicing hedge losses that were only partially offset by gains in servicing valuations. Per-loan financial profits averaged $58 per loan in 2006, down from $104 per loan in 2005.
• The largest servicers outperformed their smaller peers operationally, with the lowest cost to service and the highest direct servicing net income. However, these servicers also had the highest hedge losses which hurt their financial bottom line.

The data for this report was primarily derived from the Mortgage Bankers Financial Reporting Form (or "WebMB"), a multi-agency reporting form administered by MBA, Fannie Mae, Freddie Mac and Ginnie Mae.

-- That the stated rate was a “payment rate” – not the interest rate – that applied only during the loan’s initial period;

-- That low advertised payments applied for only a short period; and

-- The loan’s Annual Percentage Rate, the uniform measure of the cost of credit that enables consumers to shop for and compare mortgage offerings.