Servicing Runoff May Top 70%

Seven out of every 10 mortgages originated this year will be replacing loans already on the books, which means servicing "runoff" could accelerate dramatically, according to the Mortgage Bankers Association.In his forecast to the MBA's Peer Group Roundtable and the Risk Management Association in Chicago, Jay Brinkman, the group's chief economist predicted that refinancings will more than triple in 2009, from a dollar volume of $765 billion last year to $1.925 trillion in 2009. The volume of purchase money mortgages, on the other hand, is expected to decline nearly 6%, from $855 billion in 2008 to $806 billion this year. Mr. Brinkman said "plain old refis" will total $1.5 trillion while ones done under a special Fannie Mae/Freddie Mac effort that include underwater loans will reach $400 billion. The number of purchase money loans will fall only 1%, the MBA economist said. But because of shrinking loan sizes, the dollar volume will be down 5.7%. Overall, the MBA is projecting a banner year for mortgage production, $2.73 trillion.