Government loans are hot — so hot, in fact, that compared with total volumes through the third quarter of 2007, St. Louis-based Lenders One Mortgage Cooperative said Wednesday that origination levels of FHA/VA loans have more than tripled at the firm through the same period for 2008. The group, a national alliance of mortgage bankers, tracks and compiles origination activity of its more than 125 member companies by product, geography and member. “We are experiencing a changing marketplace, and our members have appropriately adjusted their business models and lending strategies to meet borrower demand,” said Scott Stern, CEO of Lenders One. Before the explosion of interest in FHA/VA products in 2008, 2007 data at the firm shows that Lenders One originated what it called “a strong volume of FHA loans,” increasing on average $3.3 million each quarter. But if 2007 FHA/VA volume was “strong,” we’re not exactly sure what the superlative should be for 2008. FHA/VA originations nearly doubled at the firm during the first quarter of 2008, compared to the fourth quarter of 2007, and volume has continued to grow exponentially from there. Of course, that growth isn’t limited just to Lenders One — Ginnie Mae, which securitizes FHA-endorsed loans, said last week that its total issuance volume had surpassed that of either Fannie Mae (FNM) or Freddie Mac (FRE) for the second month in a row. That sort of volume trending hasn’t been seen since the late 1980s and very early 1990s. After three quarters, Lenders One’s 2008 Alt-A total volume is less than three percent of the volume recorded up to this point in the year prior. In early 2007, FHA represented only one percent of the cooperative’s total originations — it now comprises nearly 50 percent of Lenders One’s total activity, the firm said in a press statment. The firm is one of the few success stories, and an example of a company that was able to successfully time a switch in its product mix. “FHA has been our most important product of 2008,” said Stern, preferring to focus on how the program has helped borrowers moreso than how it has helped the firm remain alive in a mortgage market undergoing drastic change. “FHA has helped borrowers all across the U.S. refinance out of dangerous nonprime and Alt-A loans into safer, more secure FHA products,” Stern said. “We are likely to see changes continue in the types of loans to which lenders and investors feel comfortable applying risk, and that at the same time meet the needs of the general public.” Write to Paul Jackson at [email protected]. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.