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Survey: Thrifts Retain Most Loans

More community banks and thrifts sold loans into the secondary market last year, but it still represented only 45% of their loan production, according to a survey by America's Community Bankers.

The ACB survey found that 72% of the respondents sold loans to the secondary market agencies and private wholesalers during the first nine months of 2002, up from 55% in 2001.

The 315 respondents sold $22.5 billion in residential mortgage loans, including $9.5 billion to Fannie Mae, $7.6 billion to private wholesalers/conduits and $3.2 billion to Freddie Mac. But they still retained $22.5 billion in originations on their books.

ACB concluded that "increased emphasis on working with community banks by participants in the secondary market could possibly lead to expanded sales ..."

Only 9% of the banks and thrifts in the survey participate in the Federal Home Loan Banks' Mortgage Partnership Finance program and the Mortgage Purchase Program and they sold only $888,000 in loans to the FHLBanks.

ACB director of mortgage solutions Ron Haynie, told reporters that the MPP and MFP programs have operational restraints and the servicing rights are not easy transferable.

"There are those that sell to the MPF program on a regular basis and it works well for them," Mr. Haynie said.

However, Fannie Mae and Freddie Mac have easier delivery channels. Lenders can use their automated underwriting systems and they have a boarder menu of products, he explained.

ACB has strategic alliances with Fannie Mae, Freddie Mac, Countrywide Home Loans and Principal Residential Mortgage.

Nearly 400 ACB members sold $22 billion in residential loans to the alliance companies last year.

"Community banks are becoming more comfortable selling loans, and ACB's mortgage alliance programs have obviously contributed to that evolution," Mr. Haynie said. Copyright 2003 Thomson Media Inc. All Rights Reserved. http://www.thomsonmedia.com, http://www.mortgageservicingnews.com

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