MBA Releases its 2005 Technology Study Highlights

June 28, 2005

The Mortgage Bankers Association (MBA) today released its 2005 Technology Study Highlights, which shows that participants spent an average of $156 per loan application and $250 per closed loan on origination-related technology costs. In addition, those participants that serviced loans spent an average of $25 per loan on servicing-related technology costs.

"Mortgage companies are making technology investments in order to gain efficiencies and reduce costs, especially at a time when the mortgage market is changing after several unprecedented years," said Doug Duncan, MBA's senior vice president and chief economist. "In fact, gross technology spending in 2004 increased 14 percent over 2003 among the group of mortgage companies in the technology study both years."

The 2005 Technology Study was designed to benchmark information technology costs and related practices in mortgage lending and servicing among a focus group representing approximately 20% of the U.S. mortgage origination market. Among the key findings:

  • About 75 percent of 2004 technology spending (operating expense before depreciation plus capital expenditures) was dedicated to origination functions and 25 percent of technology spending to servicing functions.
  • Of 2004 technology spending, 73 percent was baseline maintenance (required in order to continue conducting business) while the remaining 27 percent was discretionary (needed to improve functionality and performance). Regulatory and compliance obligations accounted for 9 percent of technology budgets.
  • Companies spent an average of $16,845 on technology per internal end-user in 2004.
  • The top spending priorities for firms in 2004 were: LOS enhancements and maintenance; regulatory and compliance requirements; imaging; online application software and capabilities; systems integration/ infrastructure; and customized and/or non-conforming automated underwriting.
  • Participating companies expect their technology spending budgets to increase through 2006, albeit by a smaller percentage than in the previous few years. Overall technology budgets are expected to increase by an average of 5 percent from 2005 to 2006. Previous year increases were closer to 20 percent.
  • Companies reported a wide use of technology standards, with over three-quarters of respondents indicating they have implemented XML and MISMO in some capacity.
The 2005 Technology Study was conducted with the support of Hollister Group LLC, a specialized financial services and technology consulting firm supporting the mortgage and consumer finance industries. A roundtable session was held during MBA's 2005 Technology Conference in Orlando on March 29 to review results and discuss how to better the standardize technology definitions and measurements in the future.

A copy of the Highlights is available for sale through MBA's Online Store.

Source: MBA


Contact ALTA at 202-296-3671 or [email protected].