US Mortgage Loan Origination Market

Game Change
by Prathima Rajan, April 29, 2011
Industry Trends
North America

Abstract

The financial crisis in the US has been a game-changer for several originating players in the mortgage space. New regulations have changed the roles of several market participants. Although banks benefit from these changes, brokers may lose some ground.

A new Celent report, US Mortgage Loan Origination Market: Game Change, examines new regulations in the mortgage market. The new regulations have created a struggle for survival among brokers, with various licensing norms being put in place. Banks and originators, however, face a more promising market position and are poised for growth.

As players struggle with setting their priorities and gaining market share, the crisis has a cascading effect on technology vendors. Reduced volumes have prompted lenders to maximize their return on investments. New regulations are pushing banks toward standardization; in turn, this has made lenders move from multiple lender requirements and custom-developed systems to more integrated platforms.

“Technology vendors need to seamlessly offer integrated solutions that not only adhere to regulatory norms but also transform the process into ‘Thin file’ or ‘No File,’ operating on a multivertical, single-platform approach,” says Prathima Rajan, Celent Analyst and author of the report.

Brokers have become a more costly channel, but customers are opting for direct channels via smartphone-initiated origination (in the form of a request for a mortgage loan) or online or telephone-initiated origination from the banks’ end.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

3

Introduction

5

Post-Crisis Market and Regulatory Implications

6

 

Mortgage Market Regulations

7

Climate Change—Who Stands in a Better Position?

12

Changing Landscape

16

Impact on Solution Providers

23

Conclusion

26

 

Key Findings

26

Leveraging Celent’s Expertise

28

 

Support for Financial Institutions

28

 

Support for Vendors

28

Related Celent Research

29

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