The future belongs to lenders who are willing to change, says Marc C. Smith, who is soon to become Crestar Mortgage's former chief executive officer.

SunTrust Banks Inc. of Atlanta bought Crestar Financial Corp. of Richmond, Va., on Dec. 31 for $8.3 billion. Richmond-based Crestar Mortgage is being merged into Atlanta-based SunTrust Mortgage.

Mr. Smith, 52, will be leaving May 1. He joined the parent company 25 years ago as a financial analyst and has been president and chief executive officer of the mortgage unit since 1990, and served as president of the Mortgage Bankers Association in 1998.

How has the mortgage industry changed in the last 25 years?

When I entered the industry in 1974, there was still the oral history of the days when mortgage bankers packed briefcases full of loan files, got on an airplane, and went to a thrift in Chicago or New England.

They would climb off the plane, sit down with a credit executive at that institution, and go through all these files. They would hopefully walk back without the files and with a check.

The sophisticated access to capital that our industry enjoys today is a stark contrast to a period when the housing finance industry was characterized on the basis of loan-by-loan credit and investment decisions.

What has changed technologically?

The industry during my 25 years has gone through at least two, probably three, distinct periods of technological evolution.

The '70s were characterized by rudimentary information technology replacing old, manual ledgers. By the middle of the '70s there were virtually no mortgage service functions in even small banks that were not automated in some way. But all the front-office processing was still paper- based and manual.

The next to automate was secondary marketing, which happened predominately in the '80s. It took the '90s for the front office to get digitized and get automated.

The difference between the early and late 1990s is really characterized by information technology-the digital age giving access to information on- line that has made it far more efficient for the industry to serve homebuyers.

Is the industry going to be dominated by mega-mortgage companies?

I hold the opinion that is somewhat counterintuitive: Information technology empowers knowledge, not scale. The old adages of cost-based, cost-driven scale business will be pushed into a new frame of reference.

Wouldn't the larger-scale players have access to more knowledge and resources?

If they are reinvesting their efficiency advantages from the scale in proprietary knowledge that gives them future-oriented marketing advantages, the scale will have value for them.

If they are not, it is not a good bet in the information age. They will be obsolete before their scale pays off on the basis of pure costs.

Can the smaller players afford to keep up in order to avoid obsolescence?

The faster the pace of change, the more advantage small and agile has over large and cumbersome. In the information age, the basic change will be quicker and faster than in the pre-information age. Smaller guys have an advantage.

Clearly, the technology solutions that a lender brings to the table are going to become much more critical. This will affect how a lender can deliver value to consumers, as well as to other origination sources like loan brokers.

As homebuyers become more savvy, what will mortgage lenders have to do?

We are seeing a generational shift in Web familiarity and trust. By the same token, the home and housing finance are collectively the biggest financial decision in a family's life.

We have not yet seen a behavior-even among Web-savvy consumers-that shows a willingness to go ahead with a transaction without advice. So the advisory role of the mortgage professional is going to grow.

In the information age, you are going to see technology make it more imperative for the lender to have readily digestible bits of advice for consumers. Consumers will develop more savvy about the differences between advice and a sales pitch.

Why are you leaving Crestar?

(The merger of) SunTrust and Crestar top management (gives me the opportunity) to take my retirement, that I had planned for at the age of 55, a couple of years early.

Over the last three years I have been doing double duty as an officer of the Mortgage Bankers Association as well as running Crestar and growing it to its national presence.

That has its impact on your family. I still have children at home, a 12- year-old and a 9-year-old-the last two of four-that I want to get to know again.

The only promise I have made so far is that I'll take the summer off. After that, I will see how it feels.

There are a few industry issues that I would like to stay in touch with, and it will frankly be easier as an independent than as an executive of a mortgage banking company.

Will you be pursuing anything outside of the mortgage industry?

Absolutely. I am very energized by what I see happening in the way that goods and services are marketed and sold. I think it is a neat arena to participate in. I don't have specific plans.

Who will your successor be at Crestar?

Sterling Edmunds, the chief operating officer at Crestar (Mortgage), is going to be the chief operating officer and president (of SunTrust Mortgage). He will be reporting to Donald Downing, who is the chairman of SunTrust Mortgage.

Don will stay in Atlanta, even as the operating facilities move to Richmond.

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