Home lenders moan, endure protests at gathering

By Patrick Rucker

SAN FRANCISCO (Reuters) - At a conference marred by protesters and poor attendance, U.S. home lenders gathered grim-faced over the last three days to take stock of a once high-flying industry battered by a record housing downturn.

The easy-to-get subprime mortgages that helped drive home prices higher during a five-year boom have all but vanished while sinking property values and rising foreclosures have wiped out many of the companies that would typically have been prominent at this week's Mortgage Bankers Association meeting.

Attendance was half of last year's 4,000, according to industry publication Inside Mortgage Finance, and many vendors this week said the mood has never been so glum.

"Everyone is sitting around the booths twiddling their thumbs. This is the worst, and I have been coming to these since 1985," said Barry Malone, a sales executive for a mortgage software provider called Financial Industry Computer Systems.

When the MBA last held its annual conference in San Francisco three years ago, one in five home loans were subprime and that mortgage market was valued at $625 billion. Subprime mortgage kings such as Countrywide chief Angelo Mozilo could attract thousands when he would speak at an MBA event during the industry's boom years.

Countrywide has vanished along with dozens of subprime specialists. The crash that wiped out that high-risk business has sucked much life out of the conference.

"A whole sector of the business is gone. If people aren't making loans, they aren't getting flood insurance, title searches, credit checks," said Bryan Horn, a salesperson for DataVerify which runs checks on potential home buyers.

FROM ENTREPRENEURS TO BUREAUCRATS

This week, key industry panels were not led by flashy mortgage entrepreneurs but no-nonsense government officials who now manage nearly the entire mortgage industry.

Fannie Mae and Freddie Mac are still the nation's two largest sources of housing finance but regulators seized the firms early last month.

Conservative loans guaranteed by the Federal Housing Administration that were shunned during the housing boom are now the bread and butter business for many mortgage companies.

"If you told someone two years ago that FHA would be doing this much business they would laugh in your face," said Horn.

As in past years, the gathering featured popular entertainment and marquis speakers such as Karl Rove, the former advisor to President George W. Bush. The uplifting music often preceded a grim message and special guests were the target of angry protesters.

"Well, we're certainly not in Kansas anymore, Toto," John Courson, the new president of the Mortgage Bankers Association told attendees as upbeat intro music faded at the opening session of his conference.

"This is my 50th year and I have never, ever seen a tornado like this," he said.