A $3 Trillion Year?(forecast for home mortgage originations)

It sounds implausible to suggest that we may see $3.2 trillion in home mortgage originations this year. But that's what economists at Fannie Mae are predicting. And before you scoff at the idea that lending volume this year might be nearly equal in size to half of all outstanding mortgage loans, please remember how unlikely a $2 trillion year seemed at the beginning of 2001. None of the major industry economists predicted that rates would go low enough and stay low enough to generate $2 trillion in 2001. Not only did rates go that low, they went even lower in 2002, creating a record $2.5 trillion year and shattering the 2001 record.

So we aren't prepared to discount the possibility of a $3 trillion year. Among mortgage servicers, even those that have managed to weather the impairment to their portfolio caused by rapid loan prepayment rates must have started to sweat a little bit when 30-year mortgage rates dipped below 5.7% on Freddie Mac's weekly survey in mid-March. With refinancing accounting for as much as 80% of all loan applications some weeks, it's clear that impairment woes for mortgage servicing rights are not a thing of the past.

So what's a servicing executive to do? Obviously, ...