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Paper is down, but not out.

Paper Is Down, But Not Out

Automation has become a pervasive byproduct of man's innovative spirit in the 20th century. Many businesses have leaped at the chance to trade in old tech for high tech. But many businesses are not built around paper to their very core in the fundamental way that mortgage banking is.

The paper of mortgage banking is so treasured - for legal security reasons - that a whole profession has been built up around its care and safekeeping. As the name clearly suggests, document custodians are charged with the important role of seeing, for example, that all the proper paper exists to ensure that mortgages in a Ginnie Mae pool are packaged into securities that legally can carry a government guaranty for investors.

Yet today, even the world of the document custodian - which up until now was a universe stacked with paper - is coming face-to-face with automation. What this will mean for the small and large players who perform the role of document custodians is one of the issues explored this month. Automation, as it moves through every industry, creates winners and losers and initially carries a high price tag. The question is whether small custodial shops will be able to foot the bill for systems, or whether a move to automation will favor those with deep pockets - consolidating this niche business into the hands of a relative few. Another question is whether the government will be a passive or active player in moving custodians toward automation.

An allied industry with the deep pockets and the staff to embrace the goodies that modern technology can offer is the mortgage insurance industry. In this issue we explore what the MIs are doing with artificial intelligence systems and optical disk technology and a few other assorted applications of technology.

Finally, by talking to HUD's, Fannie Mae's and Freddie Mac's technology people, we hoped to get a reading on just how much automation had taken hold in the shops of small and large originators and servicers around the country. As the article reflects, there is still a lot of paper out there - no threat to Federal Express is emerging yet from this industry. But then again, change is rarely delivered overnight.
COPYRIGHT 1991 Mortgage Bankers Association of America
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Title Annotation:automation and its effect on mortgage banking documentation
Author:Hewitt, Janet Reilley
Publication:Mortgage Banking
Article Type:editorial
Date:Mar 1, 1991
Previous Article:Economic trends.
Next Article:Boardroom view.

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