Globalization of mortgage and finance industries predicted.

Major realignments and refocusing are leading to a new globalization of the mortgage and finance industries, according to Michael Landau, president and CEO of Hampstead Financial Corp.

Addressing a seminar on "Loan Production and Strategic Alliances" at the 84th Annual Convention of the Mortgage Bankers Association of America in Manhattan, Landau predicted that the mortgage market is entering a new era in which mortgage professionals will provide a more complete array of financial products.

"Instead of 'vanilla mortgages,' mortgage professionals will accommodate borrowers seeking convenient, 'one-stop shopping' by offering much more efficiency and choice," he said. "Instead of today's traditional lenders, we will see newer, agile and more responsive mortgage companies taking their place."

The rash of recent consolidations among industry giants is based on the belief that combined size and technological prowess will lead to a larger market share of direct consumer originations, thereby, in principle, creating market efficiencies, Landau said.

The reality, however, is that borrowers will continue to seek the advice of their broker, attorney or other professional, who will in turn direct them to a mortgage professional in whom they have confidence, Landau said.

"As a result," he predicted, "the more than 60 percent of mortgage originations currently rendered through the mortgage broker or smaller mortgage banker will not drastically change for the balance of the century."

With continuing thinning margins forcing mortgage originators to seek additional sources of ancillary income, three forms of globalization will occur during the next few years, Landau asserted.

The first is Product Globalization, where mortgage professionals expand the array of financial services that they can offer their clients, including credit cards, home equity loans, insurance and other related financial products.

The second is Structural Globalization, where smaller mortgage firms form strategic alliances to facilitate this product menu expansion. And the third is Geographic Globalization, with local mortgage companies expanding their horizons abroad.

"The industry will see a new generation of mid- to larger-sized mortgage companies striving to meet the needs of these emerging trends," Landau said. "Growth-minded companies will emerge to fill the void left by the consolidations of the mid-90's, providing greater efficiency, more personalized service and a willingness to develop the potential possessed by the smaller mortgage originators."

The advantages of being part of the "21st Century One Stop Financial Shop" is the "Three P's: Product, Profit and Positioning," Landau said.

"Companies will be offering a full array of loan types, including conforming, nonconforming, sub-prime and government and residential loans," he said. "Profits would increase because there would be more products to sell, less overhead and no yield spread premium to report."