Investment bankers say several small to midsize mortgage originators are looking to sell even though the originations are booming.

The reason? "Production is high on everyone's mind," said Gerry Risi, managing director of Mortgage Marketing Services, Fort Lauderdale, Fla.

In the last few weeks, several industry observers have been predicting that origination volume in 1998 will surpass the record of $1.02 trillion in 1993.

The industry is at a crossroads, said E. Gareth Plank, an analyst with UBS Securities. Times are good, but some lenders are realizing that now may be the time to sell, because many of them "made it through by the skin of their teeth in 1994 and 1995" when interest rates rose dramatically, Mr. Plank said.

In 1994 several independent publicly traded mortgage companies were sold to banks. Banks paid premiums for those sold at the start of the year, but in the spring, as rates began to rise, prices began to plummet. Some that had put themselves on the block wound up not selling, because they could not find attractive prices when the refinancing boom ended.

Investment bankers said that smaller companies should consider selling now, because even though times are good, rates will inevitably rise again and make selling more difficult.

"This business has continuing cycles," said Herman F. Churchwell, chairman of Hamilton, Carter, Smith & Co., Beverly Hills. "People should look back at the positives and negatives of the last refinance boom and decide whether they are well-positioned for today."

Mr. Churchwell said his firm is working with several small to medium- size companies that are looking to sell.

Some large lenders such as Norwest Mortgage and National City Mortgage have acquired production capabilities in recent months, to take advantage of the favorable environment.

Norwest announced last month that it was buying the conforming production offices of WMC Mortgage. That deal is expected to add about $3 billion of production to Norwest, which is already the largest lender.

National City agreed in late December to buy the origination branches of two mortgage companies owned by First Maryland Bancorp - Eastern Mortgage Services and First National Mortgage Corp. The two are expected to originate about $1.6 billion this year.

Mr. Risi said most of the companies now looking to sell are much smaller. Most of the large originators also have sizable servicing portfolios and are seeking to find new sources of loans to replace those that are running off because of refinancings.

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