For money, mortgage bankers make loans and sell them in the secondary market.

For pride, then, like to tote up their market share and pronounce that they are No. 1, or No. 2, or even No. 3 in some segment or other of the business.

So it comes as no surprise that mortgage bankers took umbrage at a recent claim by a mortgage brokers' group that brokers originated some 45% of all home loans last year.

According to the U.S. Department of Housing and Urban Development, mortgage banks accounted for 48% of originations last year, and the number has jumped up since then.

Challenging the Numbers

That suggests that mortgage banks and mortgage brokers accounted for 93% of originations in 1992, leaving just 7% for everybody else. And all along, commercial banks and thrifts thought they accounted for about half of the market.

David Lareah, chief economist at the Mortgage Bankers Association, challenged the brokers' numbers, which came from a study done for the Phoenix-based National Association of Mortgage Brokers.

Writing in the MBA's Real Estate Finance Today, Mr. Lareah found fault with the brokers association's definition of a mortgage broker, faulted the study's sampling technique, and concluded that the 45% figure was excessive. He suggested a share of perhaps 12% would be more supportable as a low-end estimate, and that the high end should be well below 45%.

Work Together

Mortgage banks and brokers often work closely together, though, and Mr. Lareah did not want to dismiss the importance of the brokerage function. "It is not an understatement to state that no one appreciates the independent mortgage broker more than the mortgage banker," he wrote.

"What we do know ... is that during the past several years, 30% of mortgage banking company acquisitions were classified as purchased production where loans were closed in another lender's name and then sold to a mortgage banker," he wrote. "A good portion of this purchased production involves independent mortgage brokers."

James Johnson took pains recently to reassure securities analysts that Fannie Mae is well-insulated from any havoc that might be wrought on its business by the refinancing boom.

But Bruce W. Harting, an analyst with Salomon Brothers, has expressed some worries nonetheless. After analyzing the effects of an additional wave of refinancings, he wrote, "we concluded that Fannie Mae's widely expected margin compression will be deeper and longer-lasting than that experienced last year."

He has downgraded Fannie Mae's shares to "hold," from "sell," noting that added interest-rate risk was making earnings harder to project.

Mr. Harting continued his "buy" rating on Freddie Mac, noting that its callable debt insulated it somewhat from rate risk. He said refinancings would make a dent in earnings in the second half, but that the drag from "negative float income" would abate when refinancings wane.

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