The mortgage banker of the future will be an organization that is both horizontally and vertically integrated, along the lines of Countrywide Financial Corp., according to Paul Miller, a buy-side equity analyst for the Friedman, Billings, Ramsey Group.Speaking at the Mortgage Bankers Association National Secondary Market Conference in Chicago, Mr. Miller said the continued evolution of the nonagency securitization market will disintermediate the government-sponsored enterprises and other Wall Street nonproducers of mortgage assets. Countrywide is the model, as two-thirds of its production is traded on the secondary market, not by Wall Street, but by its internal operations. In the future, mortgage bankers will have to do all four loan categories -- prime, subprime, alternative-A, and niche -- to stay in business, Mr. Miller said. Many of their best loans will have to be put into portfolio in order to be profitable. Finally, mortgage bankers will need to be better at retaining their servicing portfolio, something they have not done a good job of so far, Mr. Miller said. The successful mortgage banker will retain over 40% of its servicing customers and cut out the mortgage broker, he said.

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