Mortgage IT: Not This Year's Hot Property: Will a Retreating Market Provide "Silver Lining" Offerings?

By Bielski, Lauren | ABA Banking Journal, October 2008 | Go to article overview

Mortgage IT: Not This Year's Hot Property: Will a Retreating Market Provide "Silver Lining" Offerings?


Bielski, Lauren, ABA Banking Journal


With ebbing property values, fewer originations, and stalled loan servicing volumes, the invisible hand that turned the crank on the mortgage industry eased back on the pressure. Way back.

[ILLUSTRATION OMITTED]

"All the 'levers' that drove high loan volumes and the need for technology 'got turned off'," says Jeff Lebowitz, founding consultant with Mortech, who built his business in Guilford, Conn., and has recently relocated to Oregon.

"Roughly 10% of core technology spending in the mortgage sector disappeared over 2007," says Lebowitz. And the sudden loss of a rambunctious subprime sector has resulted in an environment where there are more vendors of interesting technology than takers of it.

While Lebowitz agrees no one can predict market timing, it will be some time, he and others say, before a stable housing market pushes mortgage-related IT spending up again--probably until the next boom.

When pressed, the consultant is firm in his pessimism. "Sure, there will be some down market lenders that need to update their systems," he says. "There may be some spending related to system consolidation, but that's all 'back fill'."

Paul Schaus, president and managing partner with Catalyst Consulting Group, Goodyear, Ariz., essentially agrees. "There are certainly some progressive banks out there that are doing great financially, which may take the time to make systematic upgrades to their lending environment so they can leverage their strong position and be as choosy as they want. But those banks would be the exception. Most aren't making IT upgrades. They aren't spending, period. They are just finding ways to cut back on any extra staff they may have hired during the boom."

In that vast unstoppable cycle that is the economy, "every banker I talked to during the lending boom knew the bottom was going to drop out," says Schaus. "They were simply surprised that it fell so fast and so far from what seemed liked a very strong period. Eighteen months later, we're all still wondering."

The widely reported housing and mortgage finance predicament is a study in complication. "Issues vary from region to region," says Bert Ely, a banking industry consultant based in Alexandria, Va. "You saw outright fraud in some places and long-term economic decline aggravating the crisis in others," he says. Certainly, Ely says, not every lender was touched and many continue to deal with the conforming segment that tends to be trouble free.

"Securitization won't be wiped out, but it will shrink," predicts Ely. "The mortgage finance market is under a great deal of pressure and everything will get conservative." Now that the "pass the buck" mentality of the recent boom won't be tolerated, Ely sees the possibility of dominant reversion to portfolio lending.

Needed: case management systems

Peter Davidson, founder of Brooks FI Solutions, Downingtown, Pa., isn't as vivid in his characterization, yet he agrees that the current market is hard to read. "Under ordinary economic conditions, you might be able to say that we've started to recover," says Davidson. "Yet with oil prices, layoffs, and the stress that the financial services sector is under right now, it's hard to know how the secondary market will work and what types of products will become more widely used."

Davidson says that there could be a role for automation in a market trying to right itself and avoid foreclosure via "haircuts, workouts, and new arrangements."

"There really aren't any vendor systems that can support a bank handling any volume of client workouts." Offering an example, Davidson talked about case management systems that banks could use where the bank cuts interest rates to keep the homeowner in residence but shares upside potential down the line when the property is sold. "That's the sort of workflow and reporting tools the market could use now," says Davidson. …

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

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
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

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

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Mortgage IT: Not This Year's Hot Property: Will a Retreating Market Provide "Silver Lining" Offerings?
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?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
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.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, 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." (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.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.