Mortgage lenders aren't the only ones feeling the hurt of a year with a crushingly low volume of originations

The pain is spreading to companies that supply products or services to the industry, a point brought home by this week's announcement of lower-than-expected sales at Interlinq Software Corp.

The computer company, based in Kirkland, Wash., designs and markets originations and secondary-marketing systems for mortgage lenders. Profit Forecast Too High "Based on lower-than-expected sales and other related data so far this quarter, earnings expectations for the June quarter now appear fairly aggressive.

"While we anticipated sales to existing customers to slow down considerably, orders from new customers are lower than we expected," said Stephen A. Yount, chief financial officer.

Mortgage lenders have "changed their focus from growth to downsizing," said Mr. Yount.

Interlinq's stock was buffeted after the announcement, falling $2.25 for the day, to $4.875 a share.

Indeed, sharply lower originations in 1994 - 30% to 40% by some estimates - will probably carry over into less purchases of material and equipment by mortgage bankers, who only last year were swamped with more loans than many could handle.

New Concern: Survival

But now, with rates up and volumes down, mortgage lenders are more concerned with riding out the storm than investing in new technology, according to Mr. Yount. "Volume drops have caused them to right-size, but they arc still trying to figure out what the right level is," he said.

There may be a silver lining to all this, especially for firms that supply technology that improves efficiency.

"We believe that once the mortgage lending industry has adjusted to new business levels, which arc historically more typical of the industry, continuing industry participants will implement automation tools," said Mr. Yount.

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