Wholesale Access Completes its Thirteenth Year of
Mortgage Production Revenue and Expense Benchmarking
For Release November 15, 2006

Wholesale Access announced today that it completed the first-half 2006 Production Revenue and Expense Benchmarking for wholesale and retail mortgage lenders. This latest leg concluded with a meeting in Nashville of the financial analysts from each of the 16 participating firms.

"The purpose of the study is to do an accurate measuring of the income and cost structures of the top-leading and largest-firms in the mortgage banking industry," said Tom LaMalfa, a Managing Director of Wholesale Access. "Our goal is to compile and compare in dollars and basis points per loan seven categories of revenue, 21 categories of direct expense and seven categories of indirect expense. This is done for each of the four major production channels- broker, correspondent, retail and consumer direct. From this data, all the major industry metrics-such as sales expense by firm, average monthly volume per AE (LO) and per manager, nonsales personnel expenses and monthly units by type of personnel, etc. are produced. Study group members can ascertain how their revenue and expense structures compare with peers and how the results are affected by product mix, markets, staffing, automation and office locations."

First-half 2006's top finding was the reduced profit found in each of the four channels. Profit retreated back to 2001's levels following 2003's record performance. Project Manager and Wholesale Access Managing Director Christine Clifford said, "The results for 2006 illustrate the impact of the product shift on lenders. The most profitable firms are doing more option ARMs and Alt-A loans. This production buoyed both their revenues and profits. Prime margins are breakeven at best."

Wholesale Access collects and edits the requisite data every six months, then analyzes the results and prepares a report of the findings. The report consists of ten charts of composite data and another 30 charts for each of the four channels. Representatives of the participating firms and Wholesale Access staff meet semi-annually to review and discuss the data and analysis. Each meeting includes two days spent reviewing the findings and discussing best practices and data implications. A PowerPoint presentation of 98 tables was prepared for the meeting, reviewed and later posted-along with notes from the best practices sessions-at the Wholesale Access website.

Study Group members included American Home Mortgage, Aurora Loan Services, Bank of America, Branch Bank & Trust, CTX Mortgage, Chase Home Finance, Fifth Third Bank, Flagstar Bank, GreenPoint Mortgage, IndyMac Bank, InterFirst, LoanCity, SunTrust Mortgage, US Bank Home Mortgage, Wachovia Wholesale Mortgage and Wells Fargo Home Mortgage. Data for full year 2006, the next leg of this study, is due in mid-March. The next meeting will be held in Cleveland in June.

Wholesale Access Mortgage Research & Consulting, Inc. is a research, advisory and publishing company founded in 1991 by David Olson and Tom LaMalfa. Its business focuses exclusively on mortgage finance. In addition to two separate benchmarkings, the firm does various research projects. Current study topics include the home equity market and mortgage brokerages. Wholesale Access has completed seven studies of the mortgage brokerage business and industry since 1991. In September 2006 the company completed a major study of the home equity market. For further information, call (410) 772-1161 or visit the Wholesale Access website at www.wholesaleacccess.com.


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All material ©2007, Wholesale Access Mortgage Research & Consulting, Inc.