Will Web Lead to More Large Originators?

Although the effect of the Internet on the mortgage business remains unclear, one Wall Street analyst views the Internet as a completely new framework for asset origination in the U.S. market.It could lead to "abnormally high concentrations of mortgage assets, at least relative to the fragmented physical world arrangements bankers and borrowers currently know," according to Gary Craft, a senior research analyst for electronic commerce at Robertson Stephens, San Francisco. Mr. Craft's comments were included in a report released to coincide with the company's New Millennium conference. Writing in "Investment Opportunities in Banking's New Age: The Emerging Growth Sector for Mortgage Origination, Structuring, Placement and Trading," Mr. Craft says the notion of "breaking up the banks" is apparent within the mortgage lending industry. "Although banks will remain prominent figures in asset funding, they are likely to yield to non-depository organizations at the earlier point of credit origination, structure and underwriting," he writes. "As they do, these credit organization sites will channel their credit asset flow to potentially new sources that, in turn, will help structure and underwrite the credits for ultimate sale to funding sources."