At Chemical Bank, the major challenges in the next year are streamlining the mortgage process, managing risk, and building the servicing portfolio, according to the mortgage unit's chief financial officer.
"Pricing is still very competitive, and the biggest challenge is to improve the margins," said Glenn Mouridy, executive vice president and CFO at Chemical Residential Mortgage Corp., Edison, N.J. "That includes looking into technology and automated underwriting."
Like others in the industry, Chemical is testing automated underwriting systems from Fannie Mae, Freddie Mac, and mortgage insurers. "I think everybody is probably looking for what is the best fit for their organization, and there isn't just one fit that's right for any one organization," Mr. Mouridy said.
Concerning risk management, he said, hedging both the pipeline of mortgages being processed and the servicing portfolio is more important now because interest rate volatility has increased in the past year.
On the servicing side, Mr. Mouridy said, Chemical is unconcerned that its ranking among the Top 10 servicers has slipped.
"We don't see a major strategic advantage of being a $100 billion servicer (as Countrywide is) as opposed to a $60 billion servicer," he said. That's how big Chemical's portfolio will be by yearend, he explained.
So was buying Margaretten Financial Corp. a good decision? A little more than a year after the purchase, Chemical still thinks so, Mr. Mouridy said. To be a player in this market, Chemical had to expand its presence, he said.
"Now it's a matter of consolidating our position in our business and really being a survivor when the consolidation is completed," Mr. Mouridy said.
He pointed out that the mortgage market is still the biggest debt market in the United States, offering banks ample room to deploy their core technical strengths - managing technology, controlling interest rate risk, and doing processing such as loan servicing.