Bank Systems & Technology is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Compliance

01:56 PM
Bryan Yurcan
Bryan Yurcan
Commentary
Connect Directly
Facebook
Twitter
Google+
RSS
E-Mail
50%
50%

2014 an Uncertain Year in Mortgage Industry

New regulations and likely declines in loan origination levels portend a difficult year for mortgage bankers.

The mortgage banking industry is facing a transitional year in 2014, with likely declines in loan origination levels and increased regulation on tap. But it's not all doom and gloom, as technologies such as imaging and e-documentation can help banks drive efficiency and save money.

I've spoken to several industry experts to get their thoughts on the state of the mortgage industry for the cover story in our upcoming December Bank Systems & Technology digital issue. New regulations -- specifically the CFPB's new rules around qualified mortgages -- and the market downturn were recurring topics. Jay Brinkman, chief economist for the Washington, D.C.-based Mortgage Bankers Association says loan origination levels are predicted to drop around 32% less in 2014 compared to this year. This is due to the overall trend in a reduction in refinances and an increase in purchased mortgages, he notes.

Brinkman says this is a bad trend for banks, which typically have not been as successful as independent mortgage houses at attracting purchased customers. This is due to several factors, including having typically more aggressive loan officers since they generally offer better commission compensation. Also, Brinkman says there's a perception that banks have "relied on their brand name" a bit too much to attract refi customers. More resources will also have to be used towards regulatory compliance, as the mortgage industry will be more scrutinized than ever before. "That means the productivity of underwriters will fall because of all the additional work and checking they'll have to do," he adds.

Still, Brinkman notes that banks can look to technology to help them do "more with less." He says the industry is starting to look at introducing more imaging technology to help alleviate what is a very paper-heavy endeavor. And as the new regulations will force banks to be more meticulous in documenting the mortgage process, automation technology can help detect and fix errors throughout the process, he notes.

Ultimately, says Brinkman, "with less volume to spread across the fixed costs, the winners will be those who figure out how to use technology to do more with less."

[Related: Automating Mortgage Loan Processes for Faster, Mobile Client Service]

Bryan Yurcan is associate editor for Bank Systems and Technology. He has worked in various editorial capacities for newspapers and magazines for the past 8 years. After beginning his career as a municipal and courts reporter for daily newspapers in upstate New York, Bryan has ... View Full Bio

Register for Bank Systems & Technology Newsletters
Slideshows
Video
Bank Systems & Technology Radio
Archived Audio Interviews
Join Bank Systems & Technology Associate Editor Bryan Yurcan, and guests Karen Massey and Jerry Silva from IDC Financial Insights, for a conversation about the firm's 11th annual FinTech rankings.