The financial crisis in the US has been a game-changer for several originating players in the mortgage space. New regulations have changed the roles of several market participants. Although banks benefit from these changes, brokers may lose some ground.
A new Celent report, US Mortgage Loan Origination Market: Game Change, examines new regulations in the mortgage market. The new regulations have created a struggle for survival among brokers, with various licensing norms being put in place. Banks and originators, however, face a more promising market position and are poised for growth.
As players struggle with setting their priorities and gaining market share, the crisis has a cascading effect on technology vendors. Reduced volumes have prompted lenders to maximize their return on investments. New regulations are pushing banks toward standardization; in turn, this has made lenders move from multiple lender requirements and custom-developed systems to more integrated platforms.
“Technology vendors need to seamlessly offer integrated solutions that not only adhere to regulatory norms but also transform the process into ‘Thin file’ or ‘No File,’ operating on a multivertical, single-platform approach,” says Prathima Rajan, Celent Analyst and author of the report.
Brokers have become a more costly channel, but customers are opting for direct channels via smartphone-initiated origination (in the form of a request for a mortgage loan) or online or telephone-initiated origination from the banks’ end.
