BY RICH SWERBINSKY, PRESIDENT & COO OF THE MORTGAGE COLLABORATIVE

Amidst a fairly sharp move upwards in interest rates, closed loan production continued to fall for the national network of lender members of The Mortgage Collaborative in the month of January. But it looks like that trend will reverse in the coming months, as we saw new applications increase by 14.4% in January vs. December.
 
The uptick in new apps was a sight for sore eyes as we saw four straight months of declines in new applications to end 2021. We also saw more non-conventional products walk in the door as new business, with non-conventional loans representing 9% of new applications in January, the first time we've seen that # higher than 7% since 2018.
 
Closed loan production (in units) was a different story, down just 27.7% during the month when compared with the month prior. The product mix on new closed loan production in January also came in at 9% non-conventional, with conventional GSE product falling from 74% to 73% of all closed loan units and government products dropping from 20% to 18% when compared with December.
 
The purchase/refinance mix trended slightly more refinance month over month, but we expect that to trend more purchase heavy in the coming months. Here's the purchase share we've seen in TMC Benchmark the last six months:
 
August 2021: 61%
September 2021: 61%
October 2021: 61%
November 2021: 62%
December 2021: 66%
January 2022: 61%
 
Operational efficiency continued to fall off in January to new all-time low levels as lenders try to make sense of how to handle overstaffed operational units amidst a volume slowdown while still trying to pursue initiatives to bring in new production. The number of closed loan units closed per full-time processor dropped to 7.3 in January from 9.0 in December. Closed loan units per full-time underwriter dropped to 22.5 from 28.9 the month prior. Closed loan units per full-time closer fell to 26.7 from 31.1 last month. The average loan originator closed 4.3 units in January, down from 4.8 in December. LO comp came in at an average of 92.3 bps, down 1.8 bps from last month's 94.1 total. 
 
Average annual compensation paid to operational staff was very flat month-over-month, with average annual comp paid to FTE processors coming in at $50,900 this month. Underwriter annual comp ticked up slightly to $83,300. Average annual comp paid to closers stayed consistent at $52,500.
 
The average "app date to clear to close date" shot back up in January after plummeting to 34.0 days in December, which is by far the lowest we've seen this number in the six-year history of TMC Benchmark. Let's take a look at how this number trended throughout the course of 2021 and now into 2022:
 
January '21 - 47.9
February '21 - 43.1
March '21 - 42.8
April '21 - 45.7
May '21 - 43.8
June '21 - 41.8
July '21 - 43.2
August '21 - 42.5
September '21 - 42.3
October '21 - 42.6
November '21 - 41.0
December '21 - 34.0
January '22 - 40.1
 
The average cost per closed loan unit our members paid for their loan origination system (LOS) came in at $116 in December, identical to the month prior. The average cost per closed loan unit for our members point-of-sale (POS) system was $58 in January and $90 for their CRM.
 
50% of this month's participants in TMC Benchmark were depositories and 50% were IMB's. 39% originate under $500M a year in annual volume, 26% originate between $500M-$1B, and 35% originate over $1 billion per year in annual production.

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BY RICH SWERBINSKY, PRESIDENT & COO OF THE MORTGAGE COLLABORATIVE
​
Fueled by a spike up in interest rates that choked off refinance business, the national network of lender members of The Mortgage Collaborative that submit data to TMC Benchmark saw new applications written in December fall off by 18.5% from the month prior, foreshadowing what's likely to be a tough winter for lenders off the heels of the most prosperous 18 months in the history of the industry. New applications written in December were 64% lower than the high-water mark of the pandemic (June 2020) and down 34% year-over-year from December 2020.

Closed loan production (in units) was down just 2.5% during the month when compared with the month prior. The product mix on new closed loan production in December was close to identical to what we've seen the last few months with conventional products representing 74% of closed loan units and government products coming in at 19%.

The purchase/refinance mix trended slightly more purchase month over month, with purchases accounting for 66% of all closings. Here's the purchase share we've seen in TMC Benchmark the last six months:

July 2021: 67%
August 2021: 61%
September 2021: 61%
October 2021: 61%
November 2021: 62%
December 2021: 66%

Operational efficiency continued to fall off in December as lenders try to make sense of how to handle overstaffed operational units amidst a volume slowdown. The number of closed loan units closed per full-time processor dropped to 9.0 in December. Closed loan units per full-time underwriter dropped to 28.1 from 28.6 the month prior. Closed loan units per full-time closer ticked back up (after plummeting in November) to 31.1. The average loan originator closed 4.8 units in December, the same total as December, indicating that lenders are terminating low producing loan originators as volume drops. LO comp came in at an average of 94.1, down 0.7 bps from last month's 94.8 total. 

Average annual compensation paid to operational staff continued to fall in December as well, with average annual comp paid to FTE processors falling to $50,000 this month. Underwriter annual comp fell to $82,900, this figure lived in the mid $90,000's for most of the pandemic. Average annual comp paid to closers stayed consistent at $52,600. We've seen a shift these last 18 months in how lenders compensate processors and closers, with the latter's average salary usurping the formers. Closer average annual comp has also not fallen off these last several months like processor and underwriter comp has.

The average "app date to clear to close date" PLUMMETED to 34.0 days in December, which is by far the lowest we've seen this number in the six-year history of TMC Benchmark. Let's take a look at how this number trended throughout the course of 2021:

January '21 - 47.9
February '21 - 43.1
March '21 - 42.8
April '21 - 45.7
May '21 - 43.8
June '21 - 41.8
July '21 - 43.2
August '21 - 42.5
September '21 - 42.3
October '21 - 42.6
November '21 - 41.0
December '21 - 34.0

The average cost per closed loan unit our members paid for their loan origination system (LOS) came in at $116 in December, up $3 from the month prior. The average cost per closed loan unit for our members point-of-sale (POS) system was $48 in December and $89 for their CRM.

53% of this month's participants in TMC Benchmark were depositories and 47% were IMB's. 42% originate under $500M a year in annual volume, 21% originate between $500M-$1B, and 37% originate over $1 billion per year in annual production.