Wholesale Access Completes Part One of its Fourteenth Year of
Mortgage Production Revenue and Expense Benchmarking

For Release July 12, 2007

Wholesale Access announced today that it completed its calendar year 2006 Production Revenue and Expense Benchmarking for wholesale and retail mortgage lenders.  This latest leg of the serial study concluded with a meeting in Cleveland of the financial analysts from each of the 15 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-are calculated.  Study group members can ascertain how their revenue and expense structures compare with  means, medians and individual peers, and how income and costs are affected by product mix, markets served, staffing, level of automation and office locations."

2006's top finding was the reduced profit found in each of the four channels.  Profit retreated back to 2000'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 last year were doing more option ARMs and Alt-A loans, especially through the year's first three quarters.  This production buoyed both their revenues and profits.  The $64,000 question is: Are these products profitable over the long haul?  Prime margins are barely above break even."

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 from 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.  Each leg of the study culminates with a conference call with senior management to review and discuss the results.

Study Group members included American Home Mortgage, AmTrust Mortgage, Aurora Loan Services, Bank of America, Branch Bank & Trust, Chase Home Finance, Fifth Third Bank, Flagstar Bank, GreenPoint Mortgage, SunTrust Mortgage, US Bank Home Mortgage, Vertice, Washington Mutual and Wells Fargo Home Mortgage.  Data for 1H07, the next leg of this study, is due September 1.  The next meeting will be held in Orlando in November.

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 a correspondent lender study in the Fall with a June 2008 publication date.  This month Wholesale Access completed its eighth examination of the mortgage brokerage business and industry since 1991.  Last month Mortgage Banking published "Who's Who in Wholesale 2006," the serial article's 19th posting in as many years.  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.