5 things we learned from the FHFA listening session on fintech
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Automation can often provide cost savings, but if it becomes concentrated in the hands of too few players at a time when the mortgage industry is consolidating, some lenders fear it could reduce competition and lead to price hikes.
Large companies might have the resources to develop an in-house operation to deal with this concern, but smaller and mid-sized mortgage companies have fewer options, said Scott Olson, executive director of the Community Home Lenders of America.
“Software services are absolutely integral to…loan transactions. These contracts vary from three to five years, and so we’re sort of at the mercy of what the vendors want to charge when they renew the contract,” Olson said.
Community lenders might be able to transition to a new provider, but doing so requires an investment in time that could be hard on them financially, he said.
“For our lenders, we can’t afford to be down for even a few days and so that presents this situation of vulnerability,” Olson said, in asking the FHFA to consider policies that would address these challenges.
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