Share Growth Is Elusive.

It's a tale of two mortgage banking worlds these days: production rocks and servicing stinks.

Thanks to the production boom of the past 24 months, lenders are making money hand-over-fist, but many top ranked servicers (which also tend to be top ranked funders) are having a hard time growing their market shares.

When the tidal wave of servicing runoff and impairment charges will end is anyone's guess, but it likely won't happen until interest rates - mortgage rates in particular - begin to rise by at least 100 basis points.

Then again, as this issue of Mortgage Servicing News went to press, there appeared to be little likelihood that the Federal Reserve would hike interest rates. In fact, if anything, the central bank has made public comments indicating that it is more concerned about deflation than inflation.

Moreover, some Fed watchers anticipate more rate cuts between now and the fall which would send the overnight Federal Funds Rate below 1.25%. If that happens, mortgage rates would follow (to some degree) and prepayment speeds would accelerate even more - as would servicing runoff.

All of this would be great news for residential lenders, but not so good news for servicers.

Thanks to the never-ending refinancing binge, many of the nation's top ranked servicers are continuing to see their market shares stagnate.