Electronic Intermediaries in Primary Mortgage Market
Business To Business Electronic Commerce
Business to business intermediation is a new development in the primary mortgage industry after the advent of internet based mortgage business. The primary mortgage industry in the internet era is a classical example of how internet can result in reintermediation instead of disintermediation.The business to business intermediation in primary mortgage market is purely an outcome after the foray of internet into mortgage business. Some of the major new business to business electronic intermediaries which have emerged after mortgage industry has adopted the internet are detailed as below:
A) ELECTRONIC MORTGAGE EXCHANGES:
A web portal catering exclusively to the mortgage brokers or professional originators for procuring loans for their clients and for lenders to extend wide range of loans across geographical borders. The various electronic mortgage exchanges which have emerged after the e-mortgage business are as follows:
Industrywide Mortgage Exchange, Inc. (IMX)
IMX Exchange, a pioneer in e-commerce for the wholesale mortgage industry, is a business-to-business trading network that brings together mortgage brokers and lenders. IMX is an electronic commerce system for mortgage lenders and originators to buy and sell mortgage loans. The IMX service enables lenders to search for, bid on, and purchase loans from brokers in multiple markets through on-line extranet technology. The matchmaker system from Industrywide Mortgage Exchange will let lenders search for, bid on, and purchase loans from brokers in multiple markets through a private network. Lenders can combine over 30 variables to custom tailor their bids, including using it to identify loans that would fulfill affordable housing commitments.
Detailed
Analysis of IMX as an Electronic Intermediary
B) INFOMEDIARIES:
LION is essentially a web portal playing a role of infomediary between the lenders and the brokers. It is in a unique position of being the information link between mortgage lenders and brokers has created further business opportunities within this market.. LION, Incorporated (LINC), is an internet portal in the mortgage industry. It essentially generates revenue by charging a fee for the web development of various lender products which would be saved in the database which the brokers access through a subscription fee. In addition to significant revenues generated from website development services and online advertising, commitments to consumer site development and automated underwriting systems will lead to spectacular revenue growth. Over 5,000 mortgage brokers pay subscription fees to access its database at www.lioninc.com, where they obtain constantly updated interest rate and fee information from the nation’s mortgage lenders, current financial news, interactive links directly to lenders, and a variety of technologically advanced tools for improving their productivity.
Lenders Interactive Online Network – LION's online service provides wholesale mortgage rate, fee, and program information daily through LION's password-protected, subscription-based Web portal, (www.lioninc.com}. LION operates nationally, maintaining 26 separate databases with program and rate information organized regionally to account for variations around the country. Originators enter information about the loan that they are seeking and LION's Loan Search quickly identifies the programs that meet the needs of their client. More than 450 wholesale mortgage lenders and 4,800 originators participate in the service, with over 500 new originators signing up each month. The LION databases contain over 11 million loan pricing variances and over 11,000 wholesale lender programs. The mortgage finance closing with the help of LION is pictorially presented below:
C) FRANCHISEE ELECTRONIC INTERMEDIARIES:
MtgPro:
Some portals have developed franchisee electronic system to conduct electronic mortgage business. MtgPro Inc. started a franchise operation to bring mortgages brokers together in a national franchising arrangement. The technology involved is a loan origination system called MtgNet that allows franchised mortgage brokers to perform loan origination activities and communicate with lenders on a secure network. MtgNet enables brokers and lenders to transmit applications, perform automated loan underwriting, and conduct processing, document preparation, tracking and loan closing over the Internet.
At the heart of the MtgPro franchise system is MtgNet. MtgNet is an open, standard, secure system for Internet business to business E-Commerce providing one simple user interface as a gateway to brokers, lenders, vendors, trading partners and real time industry information. The MtgNet system will allow an originator to complete an application on any popular LOS (loan origination system), go on-line to the secure MtgPro site where desktop loan files are uploaded and stored in a virtual File Cabinet. Once on-line, originators can shop and match loan programs to loan files, send a file directly to a lender for automated underwriting and receive a decision from a lender electronically; all without using a single piece of paper.