Offshoring and outsourcing will help the U.S. mortgage industry lower total origination costs per loan by 6 percent by 2008, according to new research from the TowerGroup. "The hype regarding 25 to 50 percent offshore cost savings may be true for individual subprocesses. But it ignores the fact that lenders will neither offshore their entire loan origination or servicing process, nor offshore their entire book of business," said Craig Focardi, TowerGroup senior analyst and author of the research. "Further, no matter what offshoring model they use, return on investment and cost savings estimates must include a careful assessment of start-up investments, new marginal costs necessitated by the offshoring initiative, and overhead." Some of the research's highlights include: Mortgage firms will not perform true end-to-end loan processing in India. In the loan origination process, firms will offshore data entry, document and data verification, and quality control. In the loan servic...
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