Summary
Mortgage banking in the future - Cover Story
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Extract
Winds of change.
Winds of Change
The business of mortgage banking will be done differently in the future. Not much time is left to change the sails, but here's a look at which way the wind is blowing. The marketplace is lecturing to those of us left in the mortgage business. If you were to pause and take a moment to listen, this is what you would hear: "Say hello to the person on your left and your right. At the end of the year, two of you will be gone." I wonder if the marketplace's lecture to us has our full attention? The mortgage banking industry is undergoing the same permanent structural change as the rest of the financial service business. And as we already know, bankers and thrift managers are seeing the competitors on their right and on their left--or themselves--disappear. Consolidation is one of the inevitable results of the rationalization of any fragmented business. But consolidation and the elimination of weaker firms is not the only structural change being faced today in mortgage banking. A few other key issues are exacerbating the pressures of this transition. These other issues include price erosion, unchecked cost escalation, meager investment in technology and inadequate management capabilities. The inevitable companion to industry consolidation is intensified price competition. The traditionally high margins of the industry attracted numerous additional competitors in the 1980s. This additional competition, plus the end of the 1980s demand bubble caused by refinancings, has resulted in a marketshare struggle carried out at least in significant part through price competition. The ne...See the full content of this document
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