The so-called organic hedge in mortgage banking didn’t work out so well in the fourth quarter of 2005, as both servicing and production posted modest declines in profitability during the period. An exclusive analysis of financial statements from nine major lenders by Inside Mortgage Profitability confirms widespread anecdotal reports of deteriorating profit margins in the new loan origination business. But the analysis also shows that servicing operations were also slightly less profitable than during the… [One data table included]