Pretax profits in the mortgage industry increased last year, according to a study by the Mortgage Bankers Association of America.

A survey of 167 firms found that the average profit margin increased to 15.9%, from 12.4%, in 1996. Net operating margin increased to 13.6%, from 9.7%.

The study also found that back-office personnel expenses fell to $350 per loan, from $364, as a result of automated underwriting; the direct cost to service a loan rose to $85, from $78, with most of the increase related to foreclosure; and indirect servicing expenses rose substantially due to refinance activity.

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