A Dis-Integrating Industry Technology

By Lebowitz, Jeff | Mortgage Banking, June 2011 | Go to article overview

A Dis-Integrating Industry Technology


Lebowitz, Jeff, Mortgage Banking


The credit crisis of 2007-2008 has loosened traditional corporate thinking among mortgage bankers. Information technology (IT) and operational decisions that have been on hold are now up for reconsideration.

Constraining market conditions

The changes that will influence capital allocation decisions are now present, and they are profound.

"I believe that we are seeing across the U.S. housing market--from borrowers, lenders and everyone with a stake in the future--what I would call a 'new realism.' Step by step, we are putting in place a new foundation for our industry. It's a foundation based on the right lending standards and on a broad re-examination of what constitutes sensible risk," said Mike Williams, president and chief executive officer of Fannie Mae, in a speech made at the Women in Housing and Finance Inc.'s July 2010 Public Policy Luncheon in Washington, D.C.

Williams sees the changes in terms of how federalization of the mortgage markets will demand improved data quality, enhanced risk management and the imposition of process rules to comply with tightened oversight. Should there continue to be standardization of product and processes, lenders will be left with little on which to compete for declining mortgage volumes.

Forecasts for mortgage volume call for a continued decline. The industry has been in a seven-year recession. Should the forecast materialize, lenders will be competing in what will seem to be an ever-shrinking market.

Lenders will have to find ways to differentiate, reduce process turn times and tightly manage costs in order to survive. In the meantime, the industry and its value chain will find a new shape not now apparent.

Vertical dis-integration

The changes in the mortgage industry generally favor increased outsourcing. Factors that influence the evolution of an industry's value chain indicate a trend toward outsourcing.

Increasing compliance costs are putting pressure on lender workflow architectures. In many cases, lenders are opting to invest in updating their technology infrastructure. MORTECH LLC is forecasting as much as a 15 percent increase in technology spending in 2011. According to MORTECH 2010, others are choosing to arbitrage skill and labor cost differences through outsourcing.

In another guise, outsourcing is a form of vertical "dis-integration." The mortgage industry has undergone a series of fundamental restructurings of the mortgage value chain.

Mortgage operations were largely integrated prior to 1970. Commercial banks and savings-and-loans (S&Ls) ran all operations under one roof.

With the spinoff of Fannie Mae from the Department of Housing and Urban Development (HUD) in 1968, risk management increasingly was carved out from production and servicing. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

A Dis-Integrating Industry Technology
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.