M&A Rumor Mill Heats Up.(mergers & acquisitions)

Speculation that the nation's largest mortgage servicer, Washington Mutual, might consider an acquisition offer were bandied about by the media last month. The company's CEO downplayed talk of a possible sale and the market seems to consider it an unlikely trajectory for WaMu.

But the very fact that such rumors made their way into print point to a likely change in market conditions for the mortgage industry. With the refinancing boom slowing down, the merger and acquisition market may start to heat up.

Especially since, with rates edging upward, mortgage servicing rights are finally worth something again. That means potential buyers see significant value in the asset. And potential sellers have something to gain by considering an offer.

The WaMu rumors are probably just that, unsubstantiated rumors. But at the end of previous refinancing booms, some banking institutions and independent mortgage firms have typically taken the decline in mortgage origination volume as a sign that it's time to head for the exits. Usually, some firms sell their mortgage units and exit the business, concluding that mortgage lending is a scale business and only the big players will win in the ...