Fannie Mae Foundation

This article surveys the effects of technology on mortgage finance during the 1990 to 2000 period, focusing on the individual firm. Innovations in the three functional areas of origination, servicing, and portfolio management are identified and their effects discussed. Broader questions regarding the effect of increased efficiency on industry structure, consumer welfare, and housing affordability are also considered. Improvements in processor speeds, data storage media, telecommunications, and networking have reduced information costs, accelerated implementation of new risk management and valuation techniques, increased productivity, and allowed development of an entirely new origination channel, the Internet. Over the decade, results are most apparent in servicing, since the economics of origination require network connectivity, which did not become available until 1995. Greater efficiency in the industry may translate into increased housing affordability and homeownership rates, though it is too early to definitively assess outcomes.

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