As outsourcing of technology and processing gains legitimacy, the mortgage banking industry will split into large players who can afford the investment and achieve economies of scale and distributors who gain access to these advantages through alliances with service providers.

What the financial institutions will bring to the table is their distribution franchise, their brand name, their balance sheets, and their ability to take on and manage credit interest rate and prepayment risk. This group of institutions also sees the opportunity to generate collateral revenues.

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