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August 21, 2018

Faith Schwartz on the real estate finance landscape (MBA Insights)

“Continued mortgage modernization is an important means of solving industry problems. For example, Fannie Mae has already demonstrated that process improvements and data-enabled decision-making can reduce loan defect rates from 6% just a few years ago to under .005%…

…technology is [also] improving the opportunity for lenders to serve borrowers with low to moderate loan amounts. When Dodd-Frank imposed a 3% cap on mortgage-related service fees, the goal was to help consumers. But with today’s razor-thin margins, the rule inadvertently made jumbo loans a much bigger part of the business model for many lenders. By leveraging information closer to the point of origination and streamlining downstream processes through automation and big-data validation, lenders are finally moving the needle on the cost to originate. This, in turn, is freeing lenders to approve more low and medium-balance loans, often commensurate with first-time homebuyers and moderate-income borrowers.”

This is an excerpt. Read the full story in MBA Insights.