SAN DIEGO - There were two jokes (at least) making the rounds here at last month's Mortgage Bankers Association-CREF conference:

"What's the difference between a 30-year bond and an investment banker? The bond matures but the investment banker never does."

"How do you tell who holds the best conference? By the size of the shrimp." (Thanks Jonathan.)

But all joking aside, the overall conference mood might be best described as "happy but cautious." By official MBA count, the 4,100 attendees (a new record) got an earful from lenders in panel sessions and correspondent meetings. (See Editor Tony Wilbert's take on one of the major sessions in his column on Page 6.)

The major point to come out of the conference was this - lenders are back in business, many are about to repeat the mistakes of the past, and the worst part of all is that everyone knows it.

The biggest buzz in the aisles was that conduit lenders are now competing for basically 1% business, which is marginal at best and certainly not Wall Street's traditional game. In fact, many lenders were disappointed that the pullback of Daiwa, Capital Company of America (Nomura) and others actually served notice to other nontraditional lenders that they could step in and fill the void with their own money, thereby touching off another round of competitive lending.

One of the best organized, most lively and well attended correspondent meetings saw Lehman Bros.' Mike Mazzei before a packed room delivering an overview of the 1998 CMBS market. Lehman was the No. 1 underwriter of CMBS for the fifth consecutive year in 1998 with $17.1 billion.

Mazzei also introduced Lehman's new Commercial Mortgage-Backed Securities Index, which was touted as a new benchmark for the CMBS market. Lehman's indices in the fixed-income arena have become the industry standard, and now the firm is taking the lead in the CMBS arena with three new indices launched on Jan. 1, 1999. According to Mazzei, "The CMBS index is designed to increase the investor base and introduce more creative ways of using the CMBS market. It will allow investors to invest in CMBS through derivative securities and allow originators a means of hedging their origination spread risk."

As most folks know by now, the CMBS market grew by more than 75% last year to a record $78.3 billion in 94 transactions from $44 billion in 105 transactions in 1997. The average transaction size jumped from $419 million in 1997 to $833 million in 1998. And conduits made up 65% of the total volume of transactions. Mazzei predicted that 1999 CMBS issuance will reach $62 billion. He also said there will be smaller and more frequent deals, and that the de-mutualization of the insurance industry will continue to drive those firms to CMBS during the first six months of 1999, then the activity will subside.

By and large, lenders repeated a now-familiar theme in the industry - stick to lending on the four major food groups of office/industrial, apartments, hotels and retail. The message was to stay away from specialty properties, including car washes, nursing homes and my personal favorite, death care (cem-eteries, etc.).

Does all of this mean a return to more stringent underwriting and lending restraint in the commercial real estate industry? Not a chance, so please stay tuned.