Shares of many mortgage banks that buy loans from correspondents and brokers have lost considerable value in recent weeks.

Express America Mortgage ended the week at $5.63, down more than 40% from trades in early June. Likewise, Plaza Home Mortgage closed at $5.93, down almost 25% from June 3, while Imperial Credit Industries, which ended Friday at $9.25 has lost almost 20% in the same period.

"The wholesale companies did very well during the refinancing boom .... Now that rates have gone up and refis have almost disappeared, mortgage brokers and wholesale mortgage lenders are having a hard time keeping originations levels up," thus leading to reduced earnings, said Thomas O'Donnell, an analyst at Paine-Webber Group.

The effect this has on stock prices is compounded by investor perception that wholesale oriented companies like Plaza Home Mortgage are less likely takeover candidates.

"Certainly, they are the ones without takeover premiums in the stocks," said Mr. O'Donnell. So while retail powerhouses like Arbor National Mortgage trade close to 52-week highs, the wholesale specialists test the floors of their trading ranges.

However, a better time may soon be at hand for wholesalers, according to analysts at Mabon Securities Corp. Though the third quarter will likely not show much improvement, price competition is expected to abate somewhat by the fourth quarter. By that time, according to Mabon, cost cutting at such companies as Plaza Home Mortgage will begin to show benefits to the bottom line.

[Tabular Data Omitted]

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