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Deja vu all over again. (Cover Report: Industry Trends).

Article Excerpt
A refi boom of a decade ago holds many lessons for today. In the first full quarter of the 1991-1992 refi boom, the refi share shot to 46 percent from 21 percent. The current boom's refi share soared to 55 percent from 25 percent in its first quarter. What other parallels exist?

GEORGE BUSH IS IN THE WHITE HOUSE. Concerns over the economy dominate headlines. Tensions are mounting in the Middle East, and residential mortgage professionals are riding the crest of a refinance boom that has been going for more than a year.

* The old adage, "The more things change, the more things stay the same" could not be more appropriate. This is especially true if we compare today's home mortgage refinance market with that of a decade ago.

* Six months ago, some factors indicated that the most recent refinance boom was winding down. But heading into the autumn of 2002, it now appears refinance volumes are as strong as ever.

What should mortgage professionals make of this? How can they best position themselves to make wise strategic choices and technology investments to both capitalize during the current refinance boom and continue to do so when it finally ends?

Luckily, industry professionals have history on their side. A comparative analysis of the market climate in the early 1990s may provide some insight. Then, as now, refi business was booming. If we review what happened in the wake of that boom, it may help the industry make prudent decisions today and avoid some of the pitfalls it faced a decade ago.

Some universal truths regarding the mortgage industry offered 10 years ago by industry observers bear repeating today. Looking back, the two topics that feature most prominently in industry commentary about the last refinance boom are consolidation and servicing.

For instance, Jerry Baker, then managing director with Countrywide Funding Corporation, highlighted these topics in his article, "The Other Side of the Rainbow," in the March 1994 issue of Mortgage Banking. In the article, Baker debunked reports of the impending demise of the mortgage industry from what he called "refi anemia" as premature.

In the article, Baker cites some fundamental business trends, including: "The mortgage banking industry will continue to consolidate, but corporate appetites for the mortgage business will continue to vary widely." He also states, "Growth of purchase business and servicing portfolios will largely offset the decline in refinancings" once the refi boom is over.

What did happen to the mortgage business in the early 1990s once that memorable refinance boom Finally ended? What were the issues that emerged in terms of industry consolidation and servicing operations? And most important, what valuable lessons can we learn from those post-refi boom days of a decade ago?

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