What's in store this year for the mortgage business?

That's not a simple question to answer because the mortgage industry isn't a monolith and the various segments of the industry are often affected in opposite ways by developments in the marketplace.

For example, one prominent consultant thinks 1995 will be bad enough for the large California thrifts to make a couple of them disappear - swallowed up by large commercial banks while their stock is good and cheap.

A big reason why they are good and cheap is that rate competition has been fierce, making mortgage originations unprofitable. The losses have been a drain on thrift profits.

The commentator, David M. Partridge of Towers Perrin Consulting, did not name any targets. But then, how many large publicly owned Golden State thrifts can you name?

There's Home Savings, Great Western, Golden West, CalFed, Glendale, and Coast Savings. All would all be plums for a big commercial bank that wants access to West Coast pocketbooks, especially in light of the burgeoning of interstate banking.

Mr. Partridge's thesis is that the price acquirers are willing to pay is being based today more on the value of the customer base for cross-selling than on the existing business. Valuation of such acquisitions is shifting to the value of the customer base for purposes of cross-selling additional products.

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The market for purchase mortgages has held up well despite rising interest rates. David Dusenbury, an analyst in New York with CS First Boston, thinks demand for homes will remain fairly sturdy this year, even with a rise of 300 basis points in mortgage rates.

Michael Herzberg, chairman and chief executive of EMH Financial LP and EMH Capital, Northfield, Ill., suggests that commercial banks will become a big source of funds.

"The big banking institutions and other financial intermediaries will play the role of mortgage banker. They will lend their capital; they will use their capital to create pools of loans, which they will then securitize."

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This could be a good year for reverse mortgages, for several reasons. For one thing, they are not tied to demand for housing. For another, the number of states in which they can be marketed has risen sharply. And finally, many lenders are seeing such lending as an opportunity to shore up low volume.

There are also some other indicators of growing interest. Fannie Mae is expected to roll out a new model this year. And the California Public Employees Retirement System is weighing an offer of reverse mortgages to its members and their families.

All this activity has not gone unnoticed. The Federal Reserve Board has issued regulations about disclosure of loan costs, which should help consumers compare the offerings of various issuers.

Also, the Department of Housing and Urban Development has completed an evaluation of reverse mortgage and is expected to release a report shortly.

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