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Paul S. Reid

President, American Home Funding,

Mortgage bankers are going into 1996 with more optimism. We've seen some tough times, done tough things, but we're smarter. And now we need to be more creative.

Economists project a pretty darn good production year. Consumers recognize we've got a decent economy with very little inflation. People feel good about things and that translates into more home sales.

You'll always have some areas of the country doing better than others. But a rising tide does lift all boats and low interest rates will create improvement across the board.

You'll be looking at a reduced industry in 1995. Last year mortgage bankers struggled in the first half but things got much better in the second half. People have downsized in their drive to become more efficient. By and large, the firms that are left had to do that.

If there is any anxiousness out there, it's who will be getting into the business. Clearly the question on a lot of minds is will Respa change the law to allow Realtors to get into the business.

There may also be anxiety over the various technologies. Do you allow someone else to use technology like laptops and the Internet, and put your company into an archaic position? Or do you make sure you stay a step ahead by having all the systems you need?

- Karen Talley

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Vincent DiBiase

Senior vice president, CoreStates Mortgage

People are going to be concerned about house prices next year. You'll see many people who bought homes two or three years ago who cannot get the prices they paid. These borrowers will be looking to the economy for improvement so they can have more confidence in it.

Next year interest rates will come down slightly, but I don't see them coming down fast enough for a refinancing boom. People we talk to are saying they are not ready to make the move yet. That's because people who have taken adjustable-rate mortgages in the last 18 months are a little more cautious now. Instead of a rush, there will be a trickling effect, with borrowers waiting to see rates come down further.

In 1997 you'll start to see more refinancings, because a lot of people took five- and seven-year balloon loans that are coming due. These borrowers will look for something more permanent, like a 15- or 30-year loan.

The mortgage banking industry will see more consolidation. It's necessary because larger organizations need to look at their expenses and ways to build their bottom lines. High service and technology will be key.

- Karen Talley

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William K. Carson

Chairman, Boatmen's National Mortgage

A lot of companies are looking at streamlining their origination processes. In this competitive environment, you have to be a low-cost provider, and you need to have an efficient processing system. There will always be room for a niche player, but the industry has been undergoing somewhat of a shakedown. With the predatory pricing environment it's obvious that there will be fewer companies in the business. The trend is toward bigger operations.

Rate-wise, if things continue as they have been, and if there is a meaningful effort by the government to work for a balanced budget, there could be a real refinancing boom. The last refinancing boom was a catchup thing - before that there hadn't been a refi boom for 25 years. This time, that's not the case, and we've overestimated how fast consumers would move to refinance.

In 1996, Boatmen's is looking for a 30% to 40% increase over 1995 originations figures, because of a combination of low rates and the reengineering of our front-end process.

All in all, it's an interesting time for mortgage banking. I think we're going to have a good 1996. Even if there is no interest rate move that increases refinancing, it will still be a strong year.

- Heather Timmons

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