"Overall, it was a decent showing for independent mortgage banks with 71% reporting profitability across production and servicing operations, compared to 78% in the second quarter," she said.

MBA economists gave a preview of these results at the recent annual convention in Denver. The current quarter, in which rates have been higher than in the prior months, is likely to be challenging in terms of origination profitability, Walsh noted at the show.

For the quarter, IMBs and bank mortgage subsidiaries made an average pretax net profit of $701 per loan, an increase of $8 from the second quarter's $693. In the third quarter of 2023, the industry lost $1,015 per loan.

While originators reported lower revenues for the third quarter compared to the prior period, lower expenses offset the decline.

Total production revenue was 6 basis points lower. It was at 341 basis points in the third quarter, down from 347 basis points for the linked quarter. That translated to production revenues of $11,417 per loan versus $11,499 per loan over the same time frame.

Total loan production expenses decreased to 323 basis points in the third quarter from 330 basis points for the second quarter. In dollar terms, costs decreased to $10,716 per loan for the most recent period, down from $10,806 three months prior.

The 18 basis point margin was up from 17 basis points three months prior and a loss of 18 basis points one year earlier.

But that lower interest rate environment — and the probability of increased prepayment speeds —  resulted in servicers needing to take fair value accounting impairments to their portfolios.

As a result, net servicing financial income went negative, to a loss of $25 per loan serviced in the third quarter from a gain of $69 for the three months ended June 30. For the same period in 2023, servicing earned an average of $90 per loan.

That number includes amortization, gains or losses in the value of MSRs net of hedging and any gain or losses on the sale of bulk portfolios.

Without those items, servicing operating income was $93 per loan. That compared with $88 in the second quarter, but one year prior, they made $104.