Industry caught short by customers with refinancing habit.

CHICAGO -- Refi junkies have become a problem for the mortgage industry, according to Herbert B. Tasker, outgoing president of the Mortgage Bankers Association of America.

Refi junkies, he explained, are those who refinance two, three, even five times a year. They have been created by the mortgage refinancing boom that has propelled the industry.

Mr. Tasker said a survey by the trade group showed the boom was also affecting demand for specific mortgage products, changing marketing strategies, and putting strains on personnel. The survey findings were released Monday at the group's annual convention.

Mr. Tasker said the competition had intensified to the point where it was nearly cutthroat in some areas. With almost 20% of all mortgage customers refinancing in the past year, almost all of the mortgage companies surveyed by the trade group now offer no-point loans.

"I think it's a competitive issue," Mr. Tasker said of no-point loans. "Demand to keep stock prices up will keep it going."

Marketing Push

The survey also found that almost 90% of lenders are offering other discounts and innovative products to keep customers. Of the refinancings that mortgage companies are doing, some 40% are from their own loan servicing portfolios.

The survey found a more concerted attempt to reach customers through marketing. Almost 70% of lenders polled now advertise to customers rather than to brokers and agents.

Direct mail, newspapers, and telemarketing have usually been the media of choice for mortgage companies, but the survey showed that more than 20% have increased their use of television to sell their products.

The huge volume of business this year has also created a severe shortage of personnel. Mortgage companies are "very desperate" to get more staffers, especially underwriters, said Brian Digan, director of sales and marketing for Mortgage Bankers' Consultants, a personnel placement company.

Caught Short-Staffed

Lenders placed staffing needs highest on their list of obstacles to meeting the increased loan demand. Increased mortgage demand forced 95% to add staff last year. Companies also cited lack of adequate office space and delays in getting appraisals as other bottlenecks.

Personnel shortages are good for Mr. Digan. His company has been extra busy trying to supply staffers for the industry. He says companies are so hungry for underwriters that they are going to extremes to find them. One firm in New Hampshire recently flew an underwriter from Dallas for an interview.

The end of the refinancing boom would put an end to some of the processing problems, but nobody is looking forward to a sharp decline in originations.

"If the refi business stopped, we would have massive problems and massive bloodletting," Mr. Tasker said. "We all fear it."

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