The industry's refinancing boom is a two-edged sword, draining mortgages from servicing portfolios even as new ones are added.

The table below shows in the far-right column what percentage of their portfolios lenders were able to replace last year. The figure serves as an indicator of how hard each company is likely to be hit by loan runoff.

Significant differences among types of lenders are apparent. Companies that make primarily home equity or subprime loans have been growing fast relative to the size of their servicing portfolios, so they are likely to be well-insulated against a surge in prepayments.

Mortgage banks with big servicing portfolios appear to be more vulnerable. GE Capital Mortgage, which has reduced its emphasis on loan originations, made loans representing only 9.62% of its servicing portfolio last year and reportedly has been seeking to sell its servicing. Similarly, GMAC Mortgage replaced only 8.89%.

Some thrifts also show low replacement rates. But thrifts hold a high percentage of adjustable-rate loans in their portfolios. Such loans tend to have lower prepayment rates than fixed-rate loans because they adjust with the level of interest rates. And because they hold most loans for investment, they are less vulnerable to accounting writedowns of their servicing portfolios.

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