TMC Benchmark September Data: Record Closing Pace Continues in September, But Applications Start To Slow

​September was another record setting closing month for many of TMC's national network of best-in-class mortgage lenders that submit data to TMC Benchmark. Closed loan production (units) in September was nearly identical to August, making it five straight months of closings higher than we'd ever seen before from our network in the four-year history of our popular network data benchmarking tool. Our weary lender members may see a little operational relief in sight, as applications (units) were down 27.4% in September as compared to August. For some perspective, even with the drop-off, September application totals were still higher than any one single month in 2019. Operational efficiency stayed pretty flat for our network in September after reaching all-time highs in June, and slowly falling over the summer months.

As noted above, closed loan units were nearly identical month-over-month (-1.2% from August to September) as was the mix of conventional (76%) and government (19%) business. The purchase/refinance mix on closed loan units in September was 51%/49%. Let's take a look at that mix for the last five months::

May - 42% purchase, 58% refinance
June - 51% purchase, 49% refinance
July - 58% purchase, 42% refinance
August - 55% purchase, 45% refinance
September - 51% purchase, 49% refinance

Applications were down in September, but still strong. We've been seeing the % share of government loan applications slowly decline these past several months, topping out at 21% in June and falling to 17% for this latest month. The lagging closed loan data has followed this trend.

Operational productivity and efficiency stayed pretty consistent in September. On average, it took our members 3.3 days longer to close loans in September versus August, with the average "app date to clear to close date" time frame rising from 39.5 days to 42.8 days in the most recent month. It will be very interesting to see how operational efficiency holds up with lenders staffing up all summer and volume now starting to tail off a bit. Certainly efficiency will continue to drop as volume does, but how will efficiency this fall and winter compare with last fall and winter? We shall start to see in the coming months.

Here's the closed loan unit totals per FTE (full-time employee) for the last five months (May/June/July/August/September). While processor and closer efficiency stayed flat, underwriter efficiency fell off and LO productivity increased:

Processor - 16/17.2/16.8/15.2/15.1
Underwriter - 51.8/54.8/52.1/50.1/47.5
Closer - 63.8/64.8/62.7/61.8/61.8
Loan Originator - 7.0/8.1/8.2/8.1/8.6

The average LO comp on September closings came in at 97.5 bps, up 0.7 bps from August's 96.8 total. We've seen this number vacillate between 95-105 bps these first nine months of 2020. We saw increases in the average non-third party lender fees per loan our members charge their customers, with conventional loans coming in at $1,136 and government at $1,109.

On the compensation side, the average annual comp paid to underwriters fell for the fourth straight month to $88,419 after peaking in May at $94,767. Processor annual comp rose to $53,181 after declining each of the three months prior. Closer compensation has continued to increase all year, rising another $1,000/yr to $56,330 in September.

The average cost per closed loan our members paid for their loan origination system (LOS) fell from $95 to $93 per closed loan unit. We've continued to see the average cost of point-of-sale (POS) systems fall pretty precipitously all summer, with the September total at an all-time low of $42 per closed loan unit. The average cost our members pay for their CRM increased from $89 to $107 in September.

51% of companies that submitted September data to TMC Benchmark were independent mortgage bankers (IMB's) and 49% were depositories. 37% originate $500M or less annually, 22% originate between $500M-$1B, and 41% originate $1 billion per year or more in total volume.

Rich Swerbinsky
Chief Operating Officer - The Mortgage Collaborative
rswerbinsky@mtgcoop.com