Mortgage securitizations fell dramatically in the first half, reflecting the industry's drop in new loan volume.

Illustrating the dip, Norwest Mortgage securitized $17.4 billion of loans in the first half-good enough to snare the No. 1 spot in the industry. The total, however, was about $5 billion less than the company securitized in the same period last year. Countrywide Home Loans and Chase Manhattan Mortgage retained their No. 2 and 3 rankings but also on lower volumes.

Homeside Lending was about the only institution to buck the trend, with a 51% increase, to $6.2 billion, and a jump in rank, to No. 5 from No. 7. The Jacksonville, Fla., lender benefited from its acquisition of the mortgage business of Barnett Banks Inc. and a growing correspondent network.

The securitization volume reflects loans processed through Fannie Mae, Freddie Mac, and Ginnie Mae as tracked by Mortgage Marketplace, an American Banker newsletter. Lenders also originate so-called nonconforming loans, such as jumbos, but these products are securitized through separate conduits.

Lenders must securitize their FHA and VA loans through Ginnie Mae but can choose between Fannie Mae and Freddie Mac for conventional loans. In essence, for a guarantee fee, usually between 20 and 75 basis points, Fannie Mae and Freddie Mac agree to back securities that are created from loans.

Choosing between Fannie Mae and Freddie Mac depends on several factors, such as pricing, execution, and technology agreements, executives at mortgage banks said. They declined to discuss specific arrangements with the companies but did say the balance of business can shift from quarter to quarter because both firms are very able.

"We have very solid relationships with Fannie Mae and Freddie Mac," said Blake Wilson, senior vice president at Homeside Lending. This time around, in the first half, the lender used Fannie Mae for $2 billion of securitizations and Freddie Mac for $790 million.

Bank of America Mortgage also relied heavily on Fannie Mae, processing $3.5 billion of loans through the company and just $790 million through Freddie Mac.

The opposite was true at Resource Bancshares, which chose Freddie Mac to handle $1.4 billion of loans and Fannie Mae, just $461 million.

Chase Manhattan Mortgage took the middle road, securitizing $1.8 billion through Fannie Mae and $1.9 billion through Freddie Mac.

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