What is typically the most profitable activity of residential mortgage bankers?

The most profitable activity for residential mortgage bankers is generally loan origination. This process involves the creation of new loans where the mortgage banker earns fees and points upfront when the loan is closed. Loan origination is where the majority of revenue is generated, as mortgage bankers typically charge origination fees to borrowers for the service of securing a loan. This upfront income is significant compared to the ongoing payments associated with other activities, such as loan servicing.

Loan servicing, while important, is more about managing existing loans and collecting payments. Although it can generate a steady income stream through servicing fees, it does not typically match the high-profit margins associated with the initial loan origination process. Property management and risk assessment are also not primary functions of residential mortgage bankers; they focus primarily on facilitating loans rather than managing properties or evaluating risk. Thus, the correct rationale is that loan origination is the key profit driver in the residential mortgage banking sector.