In recent weeks mortgage lenders have experienced a flurry of new applications from prospective homebuyers who see the April 30 federal tax credit expiration fast approaching and want their $8,000 "gift" from Uncle Sam.

"We're getting calls from people who are frantic and want to get their contracts in," said John Walsh, the chief executive of Total Mortgage Services, a Milford, Conn., nonbank that funds loans in 21 states.

Like many mortgage companies, Walsh's has had decent volumes this year, but he said he fears that once the $8,000 tax credit for first-time homebuyers and a related one for move-up purchasers sunset at month's end, loan officers might be hard pressed for business.

"I could be wrong," Walsh said, "but a lot of customers know the timing of this thing and they realize the end is near."

He said he fears the second half of 2010 could be deadly quiet for new originations.

Brian Benjamin, a loan broker based in the northern New Jersey suburbs, said he too has seen a pickup in applications. "To be eligible" for the tax credit, "they need to get the contract signed by April 30," he said.

Benjamin said he believes that once the tax credits expire, applications will fall — but he's uncertain by how much. He said his biggest worry still is a lack of financing in the jumbo market, a key niche for his Two River Mortgage, which is based in Red Bank but facilitates loans in the New York/New Jersey metropolitan area, including Manhattan.

David Olson of Access Mortgage Research and Consulting Inc. in Columbia, Md., remains bearish on origination volumes for 2010.

"I'm probably more pessimistic than most," he said. "I think we're looking at a $1.1 trillion year."

Forecasts from Fannie Mae, the Mortgage Bankers Association and a handful of large lenders range from $1.2 trillion to $1.3 trillion. Freddie Mac's is slightly higher.

Olson is so bearish on the rest of the year that he says any extension of the tax credit will do little good. "More lenders will need to get out of the business," he said.

Mortgage bankers, meanwhile, are coming off a decent year, one in which $1.9 trillion of loans were funded by originators of all different stripes, nonbanks and depositories alike. Compared with the dismal 2008, fundings rose by roughly 19%.

The nation's top five originators — Wells Fargo & Co., Bank of America Corp., JPMorgan Chase & Co., Citigroup Inc.'s CitiMortgage and GMAC Inc.'s Residential Capital LLC — as a group accounted for 58.9% of loans funded in 2009, using three different channels: retail, wholesale and correspondent.

In 2008, the top five had a market share of 48.6%.

The crisis, as expected, has resulted in the nation's top-ranked funders controlling more of the shrinking origination pie.

Despite the grim outlook for new production, most analysts say there are two bright spots: profit margins will remain strong and a price war will not break out.

Also, lenders hope that 2010 will prove to be the low point in the cycle and that in the years ahead fundings will increase, though at a modest pace.

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