Mortgage banking profits increased sharply in the first quarter of 2005, as higher interest rates dampened costly volatility in the servicing business. At the same time, new originations remained at historically high levels and margins appeared to improve slightly. A group of 28 major mortgage lenders reported a combined $3.55 billion in earnings from their mortgage operations during the first quarter of 2005, according to a new analysis by Inside Mortgage Profitability. …