Independent mortgage banking companies earned an average profit of $917 per loan originated in the second quarter, a 51% increase from the first quarter, as production volumes increased and personnel costs fell.

But Marina Walsh, associate vice president of industry analysis for the Mortgage Bankers Association, said it's possible lenders were too careful on the cost side of the business.

"As things ramped up they may not have had enough personnel on hand to handle the volume," Walsh said in an interview. "Things are still volatile in the industry."

The MBA released its second-quarter "Mortgage Bankers Performance Report" Tuesday.

The improvement in profitability came despite an increase of only 7% in loan originations from the first quarter to the second quarter. (The production volume number was calculated by National Mortgage News for its Quarterly Data Report and reflects the entire mortgage industry, not just the MBA sample.)

And although the profit increase on a sequential basis looks impressive, compared with the same quarter last year origination profitability per loan fell by 32%.

The MBA's findings are based on a survey of 312 mortgage banking companies — 70% of which are nondepositories. The balance represents affiliates of banks or hedge funds.

The origination profitability numbers exclude residential loans funded by most of the nation's megabanks, including Bank of America Corp., Wells Fargo & Co., JPMorgan Chase & Co., and others ranked in the top 10.

Walsh noted that 80% of the origination volume cited in its study was retail-based.

"A lot of these firms sell to the big guys," she said.

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