barring having a more detailed discussion of the technicals of the mortgage industry (which i'm not precisely aware of), I always thought lenders merely marked up 1, 5, 10, and 30 yr treasury instruments -- they of course don't pocket all of the interest. there is a cost of capital to the lenders. i always thought of lenders as 'buying a bond' from the borrower, while fixing cost basis and duration with treasury related or derived instruments, pocketing the difference between the treasury related hedge and the 'bond rate' (mortgage rate).
regardless, look at this:
http://www.thestreet.com/_googlen/n...092.html?cm_ven=GOOGLEN&cm_cat=FREE&cm_ite=NA
an example of a decent run lender that failed to meet wall street expectations just yesterday. my point is that the mortgage industry will continue to falter, so owning a mortgage business at this point in the real estate game isn't exactly an ace in the hole (understated).
so while the housing market is slowing down and less loans are originated and refinanced, this component of GM will likely be hurting too (hurting = performing under expectations). I'm not implying as a loan originator vulnerability to loan default is the issue here.