March 04, 2010
Within mortgage and consumer lending, the drivers of IT spending are required system enhancements, ongoing maintenance, merger integration, and new systems for risk management and regulatory compliance. Examples include automated loan origination compliance, fraud checks, quality control, and credit and collateral risk assessment systems. Imaging and content management, business rules management, and business process management systems will support these vertical mortgage line of business systems and processes. In loan servicing, IT spending is increasing for automated loan collections, loan modification and integrated credit risk management systems.
Automating regulatory compliance is the most important IT function for 2010. Mortgage investors, credit guarantors and regulators are increasing loan auditing and review activities. The new standard for loan quality is moving toward zero tolerance for missing or inaccurate data, documents and compliance. As a result, loan repurchases and mortgage insurance claims denials (and related lender losses) have jumped and will remain high for the next 24 months. For new loan originations, the cost of non-compliance is now so high that it is no longer possible to argue against compliance automation.