Advanced Search
MyIDEAS: Login

Operate a mortgage company like a factory


Author Info

  • Jackson, Tyrone

    (California State University, Los Angeles)

  • Yen, Josephine


Registered author(s):


    The current financial services industry crisis is attributed in large part to the mortgage industry debacle. The mortgage industry initially saw a rise in home values and therefore a rise in mortgage originations. This occurred during a period that witnessed a decline in short-term interest rates and a decline in inflation rates. Many households, including those previously lacking access to credit, found they could borrow money to finance homes. To meet the growing demand, mortgage companies developed creative loan products and were lax in their application of the underwriting guidelines. When mortgage rates, especially those with the creative products, adjusted upward, home values fell and foreclosures increased. Originators, eager to maintain their origination volumes, became even more lax with their underwriting guidelines. With a dwindling customer base of borrowers and a risk-averse environment, the market declined to the point where too few buyers were chasing too few bad products (goods). From an economic perspective, the mortgage industry can be characterized as market disequilibrium. In the current market environment, borrowers have less disposable income, investors are risk averse, and regulatory bodies are devising more policies that will lead to higher operating costs for the industry. It is imperative for mortgage companies to insulate themselves from market vicissitudes and identify innovative processes and cost efficiencies that will lead to a sustained growth pattern during cyclical market expansion and contraction periods. This paper applies the concepts from the manufacturing industry to transform and derive new cost efficiency innovations for the mortgage industry to operate more like a ‘factory.’

    Download Info

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below under "Related research" whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Bibliographic Info

    Article provided by Capco Institute in its journal Journal of Financial Transformation.

    Volume (Year): 23 (2008)
    Issue (Month): ()
    Pages: 165-172

    as in new window
    Handle: RePEc:ris:jofitr:0940

    Contact details of provider:
    Postal: 120 Broadway, 29th Floor New York, NY 10271
    Phone: +1 212 284 8600
    Web page:

    Related research

    Keywords: factory; Mortgage Backed Securities (MBS); Adjustable Rate Mortgages (ARMs); Collateralized Debt Obligation (CDO); Credit risk; securitization; origination; disequilibrium; Mortgage company; supply chain; value chain;

    Find related papers by JEL classification:


    No references listed on IDEAS
    You can help add them by filling out this form.



    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.


    Access and download statistics


    When requesting a correction, please mention this item's handle: RePEc:ris:jofitr:0940. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Springett).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.