Compliance Instead of Innovation

Reports from our latest MORTECH 2010 survey are in production – it is our 22nd annual survey of mortgage lenders, their businesses and their use of technology. The newest report module,  “Core Technology,” definitely confirms that lenders are consuming too much energy and resources complying with new and rapidly changing regulation.

“Core Technology” begins to tell the story of how lenders attention has turned away from creative competition toward conservative compliance. The operational analog of dealing with the rising costs of regulatory compliance is the menu of planned IT investments for 2011. Not in rank order, respondents to the survey plan to invest in:

• making operations more flexible and responsive
• reducing cost of operations
• integrating workflow across  the enterprise
• refining tools to identifying qualified borrowers
• improving the quality of borrower

The target of the major investments activities is to improve operations, not toward building market position nor filling out product portfolios.  No, lenders are becoming introverted under the scrutiny of regulators. The next year largely will be spent re-tooling and not innovating.

After all is said and done, the mortgage industry will be more efficient and better able to serve regulatory requirements. Error rates will be down. Document and case processing will be more efficient. Increasing home ownership once again — that will have to wait for another year or more.

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