2016 Benchmarking Results BY: TYLER HOUSE New Platform Built By - - PowerPoint PPT Presentation

2016 Benchmarking Results

BY: TYLER HOUSE

New Platform

• Built By Loan Vision
• New Features
• User Friendly
• View Trends inside the platform
• Export full data set or reports with ease
• Expanded Metrics (personnel expense and headcounts)
• Quicker quarterly turn-around times (35-40 days after quarter end)

Industry Trends

• Costs to Originate Increase Again
• Production Volume Increases Again
• Production Revenues Slightly Increase
• M&A Activity Stalls – Will Pick up in 2017

*Based on data from the Richey May Select Complete Peer Group *Production volume is average volume per company *CTO’s are in dollars per loan.

*Based on data from the Richey May Select Complete Peer Group *Production volume is average volume per company *CTO’s are in dollars per loan.

• MBA Forecast: Volume down 15% in 2017
• Cost increase in 2017 ~ $200-$400
• More M&A activity in 2017 as sellers and

buyers are more likely to find agreement

• n price

2017 Costs Outlook

2016 CTO Increase

• 93% (or

$368) of the increase related to personnel expenses.

• 7% (or $26) of the increase related

to operating/overhead expenses

Increases in Operating CTOs

• Most

notable increases in technology related expense ~$16 per loan or 12%.

• After TRID, lenders are now

looking to improve efficiencies through investments in technology.

$ Per Loan Increase

Increases in Personnel CTOs

• Secondary, QC, Post Close, & Sales

Support & Admin with more notable increase of 19% and 25%.

• Increases in costs in every category,

but closed loans per FTE improved in most categories except Secondary, QC, Post Close and Support.

$ Per Loan Increase % Increase over 2015

Closed Loans to Loans per FTE

• Effects of TRID -> New norm

in personnel required to process, UW & QC a loan…

• Continued into 2016

Closed Loans Trend Monthly Average Closed Loans Per FTE (All personnel except sales and servicing)

Gap Between loans closed and loans per FTE

• 1 Year removed from TRID, this

gap has grown 2.5 times larger

• Why is the gap still growing?
• Continuing issues with TRID?
• Other compliance issues?
• Feel free to submit a comment in

the text chat box…

Q2-2015 Q3-2015 Q4-2015 Q1-2016 Q2-2016 Q3-2016 Q4-2016

Increases in Personnel CTOs

• Demand for skilled fulfillment

and back office personnel has gone up due to:

• Compliance

complexities to underwrite and fund loans

• Change in market share from

banks to IMBs

• TRID requiring more hands on

deck

Source: Richey May’s Annual Comp Surveys & the Social Security Administration National Average Wage Index

Increases in Production Volume

• +22% Increase in Volume year over year
• Average increase per company of $600 million in 2015 and 2016
• Break even units increase by 21% from average of 6,420 in 2015 to 7,755 in

2016

• Independents as a whole increase market share by 1%-2% during 2016.

*Based on data from the Richey May Select Complete Peer Group *Gray bars is profitability

• n core mortgage

lending activity (excludes servicing)

Profits

• 2016 Similar to 2015 – production revenues didn’t increase as much as costs.

Returns on Capital

• On average, companies retained 55% of earnings to increase capital.

Servicing Portfolios

• Average

volume for lenders who are servicing reaches 2.4 billion or almost 90%

• f production volume
• Those who are servicing should see some
• ff-sets to declines in production volume

during 2017.