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

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

2017 Costs Outlook *CTO’s are in dollars per loan. • MBA Forecast: Volume down 15% in 2017 *Production volume is average volume per company • Cost increase in 2017 ~ $200-$400 *Based on data from the Richey May Select Complete Peer Group • More M&A activity in 2017 as sellers and buyers are more likely to find agreement on price

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

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.

*Gray bars is profitability on core mortgage lending activity (excludes servicing) *Based on data from the Richey May Select Complete Peer Group

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% of production volume • Those who are servicing should see some off-sets to declines in production volume during 2017.