"We are so busy. It's crazy," said Hollins, who has worked in the mortgage business for 20 years. "The past two years were really miserable. But now it's starting to get better."

It has been a long, dark downturn for the U.S. mortgage industry. Years of free-wheeling operations came to an abrupt halt a little over a year ago and left the industry scarred by scandal, soured loans and sinking home values.

Last year, with banks clamping down on credit, unemployment skyrocketing and billions in savings erased in stock market declines, consumers largely backed away, or were turned away, from new mortgages.

Also declared dead were the subprime loans made to borrowers with poor credit and sometimes unreliable income. The loans allowed many banks and mortgage brokers to book big profits but led later in many cases to steep losses.

Now, thanks to a mix of market factors, signs of life are returning to the mortgage business even as the economy remains mired in recession and foreclosures remain a problem. Many experts believe the renewed activity in the mortgage business could help plummeting home values bottom out as early as this summer and give at least a light boost to the economy.

"Is it a return of the good old days? No, but it is picking up," said University of Maryland professor Peter Morici.

Aided by low interest rates and government incentives, refinancings have been climbing rapidly. Home purchase mortgage applications are also showing signs of a rebound, although at a slower pace.

Mesirow Financial chief economist Diane Swonk said the fundamentals driving the housing market had become much more positive in recent months and she expected housing to swing "from a drag to a push" on overall GDP growth in 2009 for the first time in four years.

"It is a little good news. It doesn't feel like we are in free fall anymore," said Swonk.

MINI MORTGAGE RUSH?

U.S. mortgage applications for the week ended April 10, were up 45.6 percent from a year earlier, according to the Mortgage Bankers Association. Refinancings make up the bulk of the business, but mortgages for new purchases are gaining ground, the association said.

In another indication of an upturn, a March report from the U.S. Commerce Department said sales of newly built U.S. single-family homes rose in February to 337,000, a 4.7 percent increase from the previous month. Sales rose at their fastest pace in 10 months.

Sales increases were seen across the country, with the highest uptick in the South but gains also on the west coast, the Midwest and Northeast.

Home sales have been bolstered by an $8,000 tax credit for first-time home buyers initiated by the Obama administration. To qualify, buyers must purchase a principal residence between January 1 and December 1, 2009.

SOURCE: Reuters