Once the on-going bank industry turmoil ends, who will be in the driver's seat in the consumer mortgage market?

The hope among many banks is that Bank of America will be so weakened that a massive opportunity will emerge for the many other banks that weren't hit nearly as hard. Wells Fargo, for example, senses opportunity in the correspondent lending market, notes TheStreet.com. The executive vice president in charge of correspondent pending made clear to the publication that "the channel remains an important part of the company's mortgage business because it helps replenish the $1 trillion-plus servicing portfolio which would otherwise shrink since many borrowers have been paying off their mortgages early in order to refinance at lower interest rates."

There's not a lot of new home purchasing going on right now, so for healthy lenders, refinancing is the name of the game. Is there anyone out there who thinks that Bank of America already seems less competitive for new mortgages already? Do they seem distracted by their foreclosure woes? But the mortgage malaise will end at some point and activity will pick up. It might be that Wells Fargo and others will end up better positioned to recover quicker than bruised Bank of America. That said, correspondent relationships can be quickly, albeit not instantly, revived if the economy and mortgage market picks up.

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