RALEIGH, N.C. - The good times are rolling in the mortgage business, and the more than 600 people who attended the Eastern Secondary Mortgage Conference here Monday and Tuesday spent a lot of time celebrating
They also spent a lot of time buying and selling loans, golfing, listening to talks, eating barbecue, checking out new products, and celebrating some more.
But is there a downside to the boom in refinancings that has given mortgage people such cause for revelry?
"The refi boom is good for a lot of people." said Charles W. Sewright, president and chief executive of Anchor Mortgage Services, Wayne, N.J., a unit of Anchor Savings Bank, New York.
Shift of Focus
"It's good for those who want to build originations and servicing. It's definitely good for the homeowner, and it increases disposable income, which is good for the economy.
"But it's not good for others with big portfolios because the prepayment speed has been hard to keep up with. and refis take your focus away from the realtor and the other traditional sources of business, which you have to rely on when refinancings go away."
Anchor Mortgage, he said, has been originating enough loans to offset any runoff and thus has been keeping its servicing portfolio stable at about $5 billion.
Another downside mentioned by Mr. Sewright and others at the conference was backlogs of processing that were causing delays in closing loans. He said bottlenecks in paperwork, appraisals, and the like had increased processing times by 50 to 100%.
|Great for Business'
Michael Lopez, president of Alpha Mortgage Corp., Winston-Salem, N.C., however, said there was nod downside to the refi boom s far as his company is concerned. Alpha does both brokerage and mortgage banking.
"Refits are great for our business." he said. "We've been around for 10 years, and we've been developing solid relationships with our realtors all the while. We don't retain servicing, so we have no problem with runoff."
Perhaps the most ominous note was sounded by Claus Lund, a senior vice president for Bank of America who is in charge of mortgage-asset management.
Technology Called Key
Mr. Lund in a talk at the conference that, while refinancings have been wonderful for most of the people in the audience investors were increasingly unhappy, and that unhappiness would eventually have an impact on the primary market. (See related, facing page).
Mr. Lund believes the key to survival after the refinancing boom will be technology, especially management information systems that help to control costs.
One lending officer, who had partied to the wee hours Monday night, was asked whether the thought the good times would end soon.
"We don't even think about those things," he said. "I guess we've got more money than sense."