During the 2011 Mortgage Technology Conference, MT convened its advisory board for a Q&A roundtable discussion about the latest and upcoming trends in the industry, which was published in the December issue of Mortgage Technology.
The following is an excerpt from the discussion of extra content that did not appear in the magazine. To read the full story and much more,
MT: What will be the biggest story in 2012?
Christos Bettios: The lenders and the servicers will have an opportunity to look at new platforms. They want tighter data standards and more analytics to mitigate their risk because that’s the driver inside the enterprise, whether it’s repurchase risk or credit losses.
Lenders will be looking for new solutions. The innovative lenders will look for solutions that are not “me too” solutions. We’ve had a trend toward commoditizing. There are two products. There are two GSEs—well, one GSE—there are all the same platforms. There is an opportunity for somebody out there who wants to do something different and have a risk mitigation solution plus something different so you’re not always the lowest common denominator.
MT: Where do you see adoption of the MISMO standards moving in the future?
Harry Gardner: There is a lot of outreach we’re doing with MISMO and the Mortgage Bankers Association to the regulators to say, “These standards are here, free and open for use.”
In fact, government requirements call for using existing standards, instead of having somebody reinvent the wheel and doing something different. I see the foundation being laid for much easier compliance for reporting requirements.
MT: From a lender’s perspective, do you think the MISMO standards are helping vendors integrate their systems more effectively?
David Zugheri: MISMO means nothing to me because we’re still transferring files in Fannie 3.2. It may just be us and our organization, but I think I speak broadly for originators when I say I don’t think MISMO can get up to speed fast enough and get down to the lower levels where it makes a difference with the consumer and the process that the consumer goes through.
MT: Are all technology users in the mortgage industry the same? Or are there different priorities depending on the type and size of a lender?
Tim Anderson: There are two markets out there. There are the big guys that have multiple channels that want to differentiate by how they deliver service to the customer, whether it’s correspondents, brokers or direct to consumers.
That is a tough gig when you’re trying to maintain channels on multiple fronts and be really good at it. That’s where it makes sense for that market to find some vendors that will keep them bleeding edge, especially on the point of sale. It’s hard enough to give the consumer enough of a tool for them to come back and make it easy for them to do a mortgage. Consumer lending is hard, but a mortgage is even more difficult.
Then you have the mid-tier and small lenders that sell to the big guys. Ellie Mae has done a very good job aggregating technology for them. There are the origination sellers and then there are the investors and the back-office sellers.
Those are the two kinds of audiences. Those that originate to sell are focused on delivering on quality and the investors that want to have trust in the system they’re using that the data is right before they have to reunderwrite all that stuff. Those are the two markets that are out there.
John Walsh: I believe the market is segmented differently than Tim does. When I ran Del Mar DataTrac, that is the way it was segmented. There were all these correspondent mortgage bankers and we’d sign 10 of them up each month and eight of them were brand new mortgage bankers and the month before, they had been mortgage brokers.
But all the new LOS deals are done with community lenders. We used to go out and sell software to folks who did 400 to 500 loans a month as a mortgage banker. Now, the LOS and core system vendors are selling to community lenders and S&Ls that do 50 to 100 loans per month and there’s a giant bifurcation in the market.
So you have the really big guys with enormous control. Then you have the very small community lenders, but there are a huge number of them and then you have a few mortgage bankers in between. One of the big questions with BofA getting out of correspondent, what does that middle-market correspondent mortgage banking market look in the future. Is it going to look like it did on 2004 to 2006? Is it gone forever as a significant core business, not that there won’t be a lot of folks successful at it? I don’t know the answer, but that’s a critical question for vendors.
To read part one of the Q&A,
