Independent mortgage bankers are making a lot less money on each loan they originate these days, and they're originating a lot fewer loans on top of that.

The Mortgage Bankers Association released a rather depressing report, showing production profits fell to $606 per loan in Q1 of this year from $890 per loan in Q4 of last year and $1,088 in Q1 of 2009 - a 40 percent drop!

The problem is that production volume is falling as costs are rising.

There was a drop in, "the average production volume for each firm to $157.8 million in the first quarter of 2010, compared to $216.5 million in the fourth quarter of 2009. In addition, production operating expenses rose to $5,147 per loan in the first quarter 2010 compared to $4,402 per loan in the fourth quarter of 2009."

The trouble is that a lot of firms are having opposite issues.

Some are understaffed, trying to deal with the recent refi boom, prompted by historically low interest rates.

Other companies have too many employees, which drives up per-loan personnel expense.

Mortgage originations have been falling steadily, and they're not expected to pop up this summer, thanks to what many are already calling a "double dip" in housing. Another negative is that the pull-through rate, that is the number of applications that make it to closing dropped to 68% in Q1 from 73% in Q4 of 2009.

That could be attributed to rough appraisals, tighter underwriting, and overall uncertainty among home buyers.

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