Servicing Boosts Industry Profits.(Statistical data)

WASHINGTON -- After several bad years, mortgage servicers finally raked it in and shored up the profits of their parent companies in 2005, according to a study by the Mortgage Bankers Association.

Servicing profits jumped from $21 per loan in 2004 to $104 last year. But it is the big servicers that really drove this jump in profitability and benefited the most from lower amortization and reduced impairment charges.

"The largest servicers outperformed their smaller peers both operationally and financially, with lowest cost to service and highest net servicing financial income," the annual MBA profitability study says.

The 20 largest shops servicing more than 100,000 loans reported net income of $108 per loan, while servicers with 6,000 to 100,000 loans reported net income of $13 per loan. Servicers with less than 2,500 loans were in the red.

"The mortgage companies that serviced fewer than 100,000 loans continued to struggle both operationally and financially in generating servicing profits that were comparable to the larger players," the study says.

Expenses tell a lot of the story. The largest servicers have per-loan expenses of $69, compared to $374 for their smallest peer group.

MBA's annual study also reported that overall profits in the mortgage industry were ...