Your Turn to Shine.

For the past three years, mortgage companies have been reporting record earnings - on the strength of loan origination revenue. During that time, mortgage servicing rights have steadily and dramatically declined in value as falling rates and refinancing activity ramped up impairment and amortization charges.

But now the tide may be changing. The Mortgage Bankers Association of America predicts that loan origination volume will fall 43% next year and another 25% the year after. The reason, of course, is the expectation that a strengthening economy will put gradual upward pressure on interest rates. And in recent weeks, mortgage rates have indeed edged upward from their historic lows. Does this represent a turning of the tide? Has a trough in rates been passed? It's starting to look like that may be the case.

While loan originators will have to scramble to keep up with a shrinking pie of new business, loan servicers should be stepping into the limelight once again in quarterly earnings reports. If the predictions hold true, MSR values will rise, and some companies, including Countrywide Financial Corp. and Washington Mutual, may be poised to post some big gains on their MSR portfolios in a rising rate ...