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While the primary-secondary mortgage rate spread is a closely tracked series, it is an imperfect measure of the pass-through between secondary-market valuations and primary-market borrowing costs.
This study tracks cash flows during and after the mortgage origination and securitization process to determine how many dollars
(per $100 loan) are absorbed by originators, either to cover costs or as originator profits.
The authors calculate a series of originator profits and unmeasured costs (OPUCs) for the period 1994-2012, and show that these OPUCs increased significantly between 2008 and 2012.
Although some mortgage origination costs may have risen, a large component of the rise in OPUCs remains unexplained by cost increases alone, pointing to increased profitability of originators.