SAN FRANCISCO -- As the industry gathers here this week for the 21st annual western secondary mortgage market conference, it is clear that the mortgage business is in high gear.

Attendance at this year's meeting is up 20% from last year, with registrations hitting 1.200, according to the California League of Savings Institutions. the conference's sponsor. Many people will come purely to do business -- to buy and sell mortgages.

"I think there will probably be a lot of deals made," said Mario Antoci, chairman of the league and chief executive of American Savings Bank, Stockton, Calif.

Concern for the Future

Others will be using the conference as an opportunity to take the industry's pulse.

While a long refinancing boom is producing spectacular mortgage originations nationwide, many lenders are beginning to fret about what will happen when interest rates eventually rise and refinancings cool off.

Industry leaders predict a significant consolidation in the mortgage business as lenders, accustomed to sharing an apparently endless supply of loans, are forced to fight each other for smaller slices of a seriously diminished mortgage pie.

The resulting war over loan pricing will hurt smaller lenders, says Muir Atherton, who heads La Jolla, Calif.-based American Residential Mortgage Corp.'s secondary marketing division.

A Few Dominant Players

Mr. Atherton predicts that 15 to 20 mortgage lenders will emerge as gigantic national players that dominate the origination and servicing businesses.

Richard T. Malloy, chief administration officer for Norwest Mortgage Co. in Des Moines, adds a warning about the shrinking-pie theory.

As refinancings become less important, Mr. Malloy says, the mortgage industry will have to depend on increased home buying to boost revenue. That, in turn, will depend on homes becoming affordable to more people, he says.

In a related issue, he and others say, lenders and secondary market agencies must redouble efforts to eliminate racial discrimination in mortgage lending. Analyses of loan data collected under the Home Mortgage Disclosure Act have suggested that bias may be widespread.

Efforts in the area by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corp. are sure to be a topic of discussion at the conference. The chief executives of both agencies are slated to give speeches.

Since the secondary market agencies were created to increase opportunities for home ownership, it makes sense that they should play a central role in ending racial barriers to home-ownership, industry experts say.

Perhaps in recognition of that, both Fannie Mae and Freddie Mac are under congressional mandate to increase the share of their loan portfolios devoted to low-income mortgages.

Another likely subject of interest this week is regulatory changes that face the industry.

For example, many mortgage lenders say that nonbank mortgage companies could soon be faced with regulations similar to the Community Reinvestment Act. These regulations could mirror Fannie and Freddie's regulations, which specify that 30% of the loans purchased by the agencies support low-to-moderate-income housing.

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