"In the mortgage business, where margins are becoming thinner and market dynamics are changing faster than ever before, the only way to grow profitably is to understand the drivers of change and develop strategies and tactics to accommodate the forces shaping the changes ahead. Opportunities are plentiful for those who can improvise and adapt (Thinakal, 1996)."
The importance of technology seems to follow the patterns of the ups and downs of the lending world. It has been noted that the interest and application of technology in the mortgage lending industry has been as sporadic as the industry itself.
Retail banking organizations have focused considerable marketing efforts and resources on generating increased first mortgage residential lending. Bank managers recognize the home mortgage as one of the most significant consumer financial transactions. However, mortgage banking, along with other residential lending services, has generic business characteristics that are markedly different from other core retail banking services and products. Some of those business characteristics that make it uniquely difficult for banking institutions to manage internally are:
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Industry expense data from the MBA 1995 Cost Study shows there are notable performance differences between mortgage originators and servicers that can be tied to production volume or operational size. Recent consolidation within the mortgage banking industry has produced very large servicing and production organizations with the potential for more efficient performance capabilities. These differences in practices can result in lending activities that are not fully competitive during periods of high demand for fixed-rate mortgages.
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