After a torrid first half, loan fundings dropped at most mortgage banks this summer as interest rates rose.

But the November figures reported by Countrywide Credit Industries, the second-largest originator of mortgages in the nation, could signal that the tide is turning for the larger mortgage banks.

Countrywide's pipeline of approved loans awaiting closing increased for the first time in six months.

But at North American Mortgage, the nation's 12th-largest originator, November loan applications were slightly down, at $1.22 billion versus $1.24 billion in November 1995.

Countrywide's pipeline totaled $4.7 billion, up from $4.5 billion a year earlier. Long-term mortgage rates have fallen about 90 basis points since July, and this decline has led to a surge in applications to refinance loans.

Angelo R. Mozilo, vice chairman of Pasadena, Calif.-based Countrywide, said that average daily refinance applications increased 40% from October.

But though the rate decline has led to more applications at Countrywide, loan applications were below year-earlier levels in November for the fourth consecutive month.

As a rule, production figures lag behind applications by up to two months.

Countrywide funded $2.8 billion of loans last month, 9% less than in November 1995. Fixed-rate loan production, which represented 72% of total originations, declined 20%.

For Santa Rosa, Calif.-based North American, originations also decreased, falling about 4% from the November 1995 level $765 million last month.

At Countrywide, home equity and subprime loan fundings continue to grow dramatically although they still make up a small portion of overall originations.

The company originated $59 million in home equity loans last month, up from $22 million in November 1995. And subprime originations tripled, going from $27 million in November 1995 to $81 million last month.

Mr. Mozilo said that despite the optimism on the originations side, there is some concern about how lower rates will affect the servicing portfolio. Generally, prepayments rise as rates fall, increasing the runoff in a portfolio.

Countrywide's Nov. 30 servicing portfolio was 15% higher than at the end of last November. At $153 billion, it is the second-largest portfolio in the nation.

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