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."