LOAN SALES AND SERVICING MANAGING OUR MORTGAGE BUSINESS 18 Flagstar originates and purchases large volumes of residential mortgages, investing in some and packag- ing the remainder into mortgage-backed securities. We retain the servicing rights on the loans we sell,  collecting homeowners’ mortgage payments, property taxes and hazard insurance premiums monthly and distributing payments to investors, all for a fee.  The fee revenue from servicing loans acts, in most cases, as a natural hedge against an upturn in interest rates, providing a source of revenue in a rising interest rate environment when loan origination income may decline.  During 2003, we serviced more than 583,000 loans and closed the year with a mortgage servicing port- folio for other investors of $30.4 billion, an increase of 40.7 percent from December 31, 2002. Our servicing area successfully handled record volumes in 2003, thanks to gains in paperless processing. Customers can currently make mortgage payments; order payoff letters; view and print statements, tax and insurance payments and 1098s all online. We also now accept scanned insurance and tax bills from customers, and are offering Web access to statements in lieu of monthly mailings. 