SAN FRANCISCO - The shrinking mortgage market dampened the mood at last week's secondary market meeting of the Western League of Savings Institutions.

Officially, registration at the event was down only 5% from last year, to about 1,000. But several participants said the conference seemed much smaller than in previous years, and lacked energy.

One executive from a small thrift, Jeffery M. Bond of Cenfed Bank, Pasadena, Calif., said many at the meeting were shopping for new jobs, in anticipation of cutbacks at their institutions. Downsizing continues, as lenders cope with the lower volumes that have followed the refinance boom of 1992 and 1993.

Another factor casting a pall over the conference: anxiety over the discounted adjustable-rate mortgages that thrifts made last year. The worry is that as consumers refinance into fixed-rate mortgages, ARMs will be paid off before thrifts have a chance to recoup the cost of making the mortgage.

Things looked a bit different from the vantage point of a large thrift.

Sam Lyons, senior vice president of mortgage banking at second-ranked Great Western Bank, Chatsworth, Calif., said lenders were upbeat, because they are well positioned to take advantage of the trend toward fixed rate lending. Like other large thrifts, Great Western has said it plans to be a player in the fixed-rate market.

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As at most mortgage conferences these days, there was a buzz about the new technologies that Fannie Mae and Freddie Mac are rolling out.

Last year at this meeting, Freddie Mac announced its pilot automated underwriting system. That has since been rolled out commercially, and the agency is in the painstaking process of getting lenders to install it.

Neither agency made major technology announcements this year in San Francisco, but both unveiled incremental changes.

Freddie Mac said it would streamline the underwriting of the highest quality loans it buys.

For these loans, lenders will no longer be required to calculate income- to-debt ratios - a staple of conventional underwriting. In addition, a lender can simply take the borrower's word for the level of non-mortgage debt, instead of verifying it.

Freddie Mac defines high-quality loans as the top 20% of its loans, made to borrowers with good credit histories and good appraisals, or assessments that show a property has held its value over time.

Speaking to reporters, Freddie Mac chairman Leland Brendsel said the move would mean lower costs to consumers. But, he said, Freddie does not plan to buy these loans at better prices than other loans. The service will begin next month.

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Fannie Mae announced that its automated origination and underwriting system will now be linked to software provided by 11 mortgage software firms.

These include Gallagher Financial Systems Inc., Nashville; MortgageFlex Systems Inc., Jacksonville, Fla.; and Countour Software Inc., Campbell, Calif.

Separately, Fannie Mae said that by late August, lenders will be able to use its automated underwriting system for a streamlined refinancing.

"With mortgage rates much lower than a year ago and with most experts expecting a refinance boomlet this summer and fall, our streamlined refinancing ... is a win-win: faster turnarounds and higher volumes for lenders and faster loan closings for consumers," said Jayne Shantell, Fannie Mae senior vice president for financial and information services.

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This is the 25th anniversary of Freddie Mac's congressional charter.

To celebrate, the company gave away tie-dyed T-shirts that evoked the era in which it was founded. They carry an unlikely logo for this most conservative of financial firms: "Peace, Love and Freddie Mac."

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