WHOLESALE LENDING 13 Flagstar Bank is a leading mortgage wholesaler, funding mortgages for more than 4,500 mortgage compa- nies nationwide. In addition, we purchase loans from a network of approximately 1,000 correspondent  mortgage lenders, including banks and credit unions with whom we have a business relationship. We rank nationally as the eighth largest wholesaler and the 13 th largest correspondent lender in the country.  In 2003, Flagstar Bank posted record mortgage volume of $56.4 billion, with $32.0 billion generated through our wholesale network of mortgage brokers and $18.3 billion attributable to our correspondent partners for a total increase of 28.6 percent over 2002. Technological advancements allowed us to capitalize on the interest rate environment to achieve record production while still providing superior customer service.  We made significant strides toward achieving a paperless environment in the past year. Currently, we have paperless underwriting in all Flagstar and contract partner offices, with 99 percent of our customers using electronic appraisals. In 2003 we also introduced a way for customers to electronically transfer and view images on our Web site. In addition, providing online access to lock and request funding for loans has allowed us to reduce errors, gain speed and efficiencies and achieve record volumes with minimal additions to staff.  Looking ahead, we are dedicated to improving processes and automating work flows to make it easier for our customers to do business. We also expect to hire more wholesale representatives to increase our penetra- tion in smaller locations and gain market share.  In order to close mortgage transactions, mortgage companies at times borrow the required funds from a warehouse lender, such as Flagstar Bank. Our ability to provide this specialized financing has strengthened our relationships with our correspondent lending customers. In 2003, we extended $2.0 billion in credit to 328 customers, almost doubling both the dollars extended and the number of customers recorded in 2002. At year-end 2003, we had $346.8 million in credit drawn and outstanding.  WAREHOUSE LENDING TECHNOLOGICAL ADVANCEMENTS ALLOWED US TO CAPITALIZE ON  THE INTEREST RATE ENVIRONMENT TO ACHIEVE RECORD PRODUCTION  WHILE STILL PROVIDING SUPERIOR CUSTOMER SERVICE. HOME LOAN CENTERS MORTGAGE ORIGINATIONS (IN MILLIONS) 99 00 01 02 03 38 42 69 92 128 99 00 01 02 03 $14,550 $9,865 $32,997 $43,192 $56,378