C-BASS Competition
Now Viewing C-BASS's competition in: Mortgage Banking
Call Preparation Questions
Customers, Marketing, Pricing, Competition
Does the company operate a network of retail sales offices? - A mortgage bank may have a network of retail offices where consumers can apply for a mortgage.
Does the company have arrangements with correspondents to acquire mortgages? - Some mortgage bankers have networks of "correspondent" originators and independent brokers who feed them loans.
Does the company have arrangements with homebuilders or real estate agents to originate mortgages? - Some mortgage bankers have wholesale relationships with homebuilders and real estate agents.
Does the company have Internet marketing arrangements? - Companies use popular sites like Google and Yahoo! to advertise.
What percentage of the company's originations come through its website? - The Internet is becoming a larger source of mortgage loan applications.
Does the company make originations in the subprime market? - Subprime borrowers have poorer credit ratings but pay higher rates or fees.
How does the company compete with the large originators? - Smaller companies may focus on non-conforming loans or provide superior closing services.
Competitive Landscape
Demand for mortgage services is driven by home sales and the refinancing that occurs when mortgage rates are low. The profitability of individual companies depends on volume, interest rate spreads, and efficient operations. Large companies have big economies of scale in operations. Small companies compete successfully by funneling mortgages to the large companies. The industry is also capital-intensive and highly automated: annual revenue per employee is close to $300,000.
Business Challenges
CRITICAL ISSUES
Loan Demand Increases as Lending Standards Tighten - Mortgage applications and refinancings have risen amid falling interest rates. But mortgage defaults have also been increasing, causing bankers to curtail lending to all but the most credit-worthy applicants. Lenders are being stricter about who they lend to, while balancing the need to offer mortgages for new and existing homes that can produce solid profit margins in the future.
Heavy Industry Dependence on Fannie Mae, Freddie Mac - Fannie Mae and Freddie Mac's financial health directly affects their ability to finance mortgage securities. They are the largest suppliers of home loans in the US, and as such, many mortgage bankers depend on these two government-controlled firms. The two companies set mortgage and business standards, and the interest rate at which they can sell securities sets mortgage rates for the industry. Despite backing by the US government, these agencies have been seriously weakened by the subprime mortgage crisis, further destabilizing the mortgage industry.
Industries Where C-BASS Competes
- Financial Services
- Lending
- Mortgage Banking & Related Services(primary)
- Lending
