As rates rise and demand for loans drops, will mortgage banks get too aggressive?

Low interest rates have ensured that mortgage bankers had to do relatively little to attract new business in recent years. But this likely will change as borrowing costs rise and bankers now worry some lenders will make risky loans to keep their businesses alive.

Mortgage bankers processed close to $4 trillion of mortgages in 2003, a banner year. While business in the last two years has been exceptional — twice the annual average in the 1990s — it is expected to fall off some 18 percent in 2006 from 2005's projected $2.78 trillion, according to the Mortgage Bankers Association (MBA), an industry trade group