If you are expecting a price-cutting bloodbath in the mortgage market next year, think again.

That's the message beamed to investors by Angelo Mozilo, president of Countrywide Funding Corp.

Mr. Mozilo, who spoke at a New York conference sponsored by Alex. Brown & Sons, rejected the widely held belief that the end of the two-year-long refinancing boom will lead mortgage banks and brokers to undercut one another in a bid for market share.

"All of you who are waiting for a price war can stop. It's not going to happen," he said. Unlike the banks and thrifts that waged a protracted price war in the '80s, he added, "we don't have access to the United States Treasury."

This view, as may be expected, was generally supported by industry executives attending the investor's conference. "The smaller companies who might want to [win market share with price] won't be able to sustain it," said John Robbins, chief executive officer of American Residential Mortgage, La Jolla, Calif

What may erode is not pricing but underwriting quality, according to Mr. Mozilo. "The war will be more subtle than [pricing]," he said. "Terrible loans" will be originated by an industry hungry for volume.

Shift to a Purchase Market

At the same time as the industry should be alert to a slide in quality, individual companies will be moving strongly toward pumping up purchase mortgage volume, according to many at the conference.

The volume of purchase mortgages has been at record levels recently and has been particularly strong with first-time buyers. Most lenders are hoping this trend will prove to be durable, helping to cushion the impact of a drop in refinancing

Countrywide is counting on the ability of its network of brokers to make the necessary transition to a post-refi market, said Mr. Mozilo. "These are terribly resourceful people and they adapt to a purchase market," he said.

Others will take different tacks in their quests for purchase volume. North American Mortgage of Santa Rosa, Calif., will try to access the purchase market by opening retail branches as well as adding retail to existing wholesale offices, according to Terrance Hodel, chief executive officer. Retail offices by and large have a higher percentage of purchase business than other sources of mortgages.

A Different Tack

Hamilton Financial Corp. is also stressing purchase business, but is taking a slightly different approach to satisfying this aim. The company recently entered into an agreement with Fox & Carskaden, a California real estate broker

The company is counting on the pact, which will funnel loans originated by a mortgage banking subsidiary to Hamilton, to prove a rich source of purchase mortgage business, according to William Kirschenbaum, chairman of the San Francisco-based company.

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