CAMBRIDGE, Mass. - Large mortgage lenders can combat shrinking margins and increase revenues by customizing their loan pricing and products to each borrower, a Forrester Research Inc. report says.
Many large lenders miss out on revenue opportunities by mispricing their loans, the report, issued Monday, maintains. It advises personalized pricing - offering desirable consumers more attractive rates and using higher rates to discourage potentially unprofitable borrowers.
The report attributes these lenders' shrinking margins in part to Fannie Mae and Freddie Mac's distribution of automated underwriting systems to brokers and smaller lenders.
It also questions how much automated underwriting has saved lenders. Nearly half the lenders interviewed for the report said it has increased their loan processing and closing levels but they could not quantify the reductions.