Saw this article today and it got me thinking. If one of the fundamental drivers of the credit crisis is declining home prices which is helping cause the deleveraging of the financial system we are seeing today, what then are the implications of the article below:
http://www.thetruthaboutmortgage.com/lenders-lost-more-than-500-per-loan-last-year/
According to the latest Cost Survey from the MBA, lenders lost more than $560 on each loan they originated last year. The main driver in the rising cost: rising production costs.
Net marketing income averaged $1920 per loan, down from $2180 per loan a year earlier.
Some thoughts- today's loan origination models are ripe for reinvention.
I spoke with a friend yesterday who is an AE for a semi still standing bank. The word on the street is that Citi is moving to a completely automated model (a'la ING), reducing the need for AE's in the field.
Technology can help banks here, look for a wave of tech companies coming into the space to help allieviate this growing and troublesome pain among lenders.
Banks typically view the mortgage as one of the best relationship products, but at $500 a loss per ion this environment, the pain cannot be ignored.
Stay tuned.
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