RALEIGH, N.C. - Price competition and cost-cutting have been a driving force for the mortgage industry since the heavy volume of the 1992- 93 refinance boom disappeared.

Ralph S. Mozilo, executive vice president of Countrywide Funding Corp., Pasadena, Calif., told the Eastern Secondary Market Conference here that mortgage lenders should not pass on the cost of new technology to their customers. Rather, he said, lenders should pass on the savings they will reap from the investment.

As an example, Mr. Mozilo cited Countrywide's underwriting system, in use since 1993, that tells customers approved for mortgages whether they also qualify for a home-equity line of credit. Sales of the additional product will eventually pay for the $1.5 million cost to develop, along with another $1.5 million each year to update the system.

Mr. Mozilo recommended an investment in the most up-to-date technology available because the high cost will eventually pay for itself. But he warned that the spending must be judicious, not always an easy task.

"This industry has spent to much money for too little results," he said. "We have to spend money more wisely."

Mr. Mozilo said mortgage bankers should make decisions on an investment in technology with long-term goals in mind.

"We must realize technology will eliminate some people" from our staffs, he declared. "That is part of the value added to the business - some people will be eliminated, bringing down costs," including the cost of training.

Companies without access to the large amounts of capital necessary to make such an investment in technology, he said, should think about forming alliances - or strategic partnerships - with other companies.

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