Fiducitation: Residential Mortgage
Origination Trends
Author: Ray Ferrara
and Brian O’Keeffe
Date: December 21,
2001 © 2001 Fiducite.com, Inc.
Fiducitation: A
synthesis of public Internet resources on the topic.
Instructions: Use the
Table of Contents to navigate the document. Each citation has up to four
distinct parts: Annotation, Clip, Source, and Cached File. Our Annotation
and Clip (text or graphic from source document) help you decide
whether to view the document. The source document may be viewed by clicking on
the Source URL or by opening the embedded Cached File. All
information is attributed to its source.
The main purpose of this Fiducitation is to explore trends
in residential mortgage origination by non-traditional sources. Non-traditional
sources would basically exclude any sources that are NOT mortgage brokers,
banks, or thrifts, but would include
entities such as insurance firms and agencies, real estate agents, and mutual
funds.
Our preliminary research did not uncover any recent
statistical estimates – and very little evidence overall – of origination by
the non-traditional sources mentioned above. There is statistical evidence of a
strong move to on-line origination, but all the on-line originations are being
handled directly by traditional sources or by multi-lender sites like Lending
Tree and I-Own which ultimately turn these originations over to the traditional sources. We did find
a few web sites of non-traditional firms (e.g. insurance or real estate) that
were also promoting mortgage origination, but these were very few. Cendant is
obviously the major “combiner” with its combined real-estate-and-mortgage
division, but most of the other ones we
saw were typically just combined web sites where multiple firms just co-existed
on the same site, such as American Express/Prism Mortgage or American Insurance
(http://www.americanins.com/) with
its multiple subsidiaries linked to the
same site. A Few other insurers, like Trinity Life (http://www.servicehotline.com/insurance-health/thetrinitylifegroup/)
do not even list their mortgage operations on the same site, but just provide
links. In summary, we saw no real evidence of a trend toward mortgage
originations by non-traditional sources,
but rather evidence of multi-purpose web sites with traditional mortgage
originators sharing shelf space with non-traditional firms.
The one very long-term trend which may bear watching is that
of true “collaborative” commerce – the next wave beyond e-commerce. Several of
the presentations mentioned in the second section of this document begin
to touch on this trend – which envisions going beyond
web-enablement of existing paper-based processes to real coordination and
electronic combination of web-based processes into one streamlined value
chain. If and when this happens, we may
begin to see a real fundamental change in the origination process and the
players in it. We are currently
researching the probable effects of these changes on mortgage origination, and
will update this report shortly.
Presentations and Papers on Mortgage Origination Trends
Author:
Mortgage Bankers Association Issue Paper: National Registry of Mortgage Originators
Annotation:
The MBA is attempting to form a national registry
of ALL mortgage originators. We contacted Bud Carter of the MBA group
organizing this at 202-557-2859. As yet, there is no data or procedures to
release, as the Registry is just forming. However, the registry when it forms
should be a great source for quantitative and qualitative information on
mortgage originations.
Source:
http://www.mbaa.org/news/index.cfm?STRING=http://www.mbaa.org/news/2001/pr1206a.html
2000 Internet Home and Mortgage Shopping
Survey
Annotation:
This
somewhat dated survey does have one key table, Table 20, which shows statistics
on mortgage originators by name and type of the 1000+ survey respondents.
Unfortunately, there are past or future periods of similar data to compare
against, so trends cannot be discerned. We did not identify any significant
origination activity by non-traditional sources in this table.
Source:
http://www.mbaa.org/news/index.cfm?STRING=http://www.mbaa.org/news/2001/pr1206a.html
Cached
File:
New Directions in Mortgage Lending
Annotation:
This
presentation was given at an April 2001, MBA conference by a Lending Tree
representative. Beside an overview of online origination processes and trends,
it provides estimates of on-line originations by mortgage originator. Again,
other than activity by multi-lender sites like Lending Tree, there is little evidence of non-traditional
sources.
Clip: next page
Source: http://www.mbaa.org/present/tech01/lebda.pdf
Cached
File:
Inside Mortgage Finance
Annotation:
This newsletter and its accompanying annual and
special reports purport to give “the most
comprehensive mortgage statistics available anywhere” as well as coverage of market trends.
Clip: “Since 1984 the residential mortgage industry has turned to Inside Mortgage Finance for weekly news, exclusive statistics and analysis of legislative developments, regulatory changes, and market trends. Its research department surveys the mortgage market and maintains extensive data, helping make the publication the most widely read and trusted in the mortgage business.
Mortgage market players are kept current of issues in the mortgage origination, mortgage servicing, and mortgage insurance businesses.
You’re invited to join the key executives who rely on IMF for a definitive understanding of today’s mortgage market.
· Rely on the most comprehensive mortgage statistics available anywhere.
· Learn details of the latest developments in mortgage automation and technology.
· Get an inside look at Fannie Mae and Freddie Mac, the two secondary market giants that govern the mortgage industry.
· Learn the details on the hottest mortgage products and trends.
· Stay on top of mortgage news from Congress, HUD, the Federal Reserve Board and all the agencies.
· And -- readers get an exclusive quarterly look at the top mortgage originators, the top mortgage servicers, the top mortgage insurers, the top private mortgage conduits, and more.
Inside Mortgage Finance is published weekly, 48 times a year. The annual cost of a subscription is $767.
Source: http://www.imfpubs.com/shop/imf.html
Cached
File:
Pioneering the Frontiers of Electronic Markets
Annotation:
This
is the title of a presentation given by Prof Seagers of the University of North
Carolina Business School at the Mortgage Bankers Association last annual MBA
convention. He examines some of the trends in e-commerce and c-commerce
(collaborative commerce – the next wave in his opinion) both generally and also
in the context of the mortgage business.
Clip:
Source:
http://www.mbaa.org/present/2001/seagars_1015.pdf
Cached
File: (not include due to size 6.5MB – can be obtained from the source URL)
Tower Group Articles
Annotation:
The
Tower Group – a for fee research service to which we believe Fannie Mae
subscribes has serval relevant articles and research notes.
Source: www.towergroup.com
Best Practices in Online Best
Practices in Online Mortgage Origination
Annotation:
This presention was given by a Countrywide
representative at an April, 2001 MBAA conference. One of the key facts he
revealed is that e-commerce fundings accounted for 45% of Countrywide’s total
first quarter fundings.
Clip:
Source:
http://www.mbaa.org/present/tech01/bielanski.pdf
Cached
File: 
Future Winners and Past Mistakes…
Annotation:
An
EllieMae representative’s view of major technology trends.
Clip:
.
Source: http://www.mbaa.org/present/tech01/cooley.pdf
Cached
File:
Internet Lending: Simplifying the Mortgage Origination Process
Annotation: The author
presents several different business models but does not provide statistics.
Clip: “As early adopters have embraced mortgage originations online, several different business models have evolved. The retail origination model is a site that offers only the sponsor’s products. An example of this would be Countrywide (www.countrywide.com) or Indy Mac. The auction model is where the site sponsor allows for the mortgagor to input his/her information and choose a loan program. Once this is received, the site gives up to four different lenders a chance to bid on the mortgage for that specific customer. MortgageAuction.com is one example of this model.
There
are a number of multi-lender business models. HomeAdvisor, iOwn and LendingTree all follow this model whereby
after receiving an inquiry from a prospective borrower, a whole menu of
products provided by different lenders are provided to the borrower as
alternatives. Mortgage.com falls into
what I would term the private labeling or outsourcing model of a
web-based loan production platform that can assist in the processing and closing
of the customer that hit the Web site of the particular sponsor. Mortgage.com wants to offer its technology
to other lenders/brokers in the mortgage transaction, so as not to rely solely
on the revenues associated with just the origination of the mortgage.”
Source:
http://www.housingfinance.org/InternetLendingBusse%20article.doc
Cached File: