Ellie Mae Releases Study on Community Banks’ Mortgage Operations

""Ellie Mae"":http://www.elliemae.com/ has released the results from its commissioned study on community banks, and the findings reveal that smaller financial institutions fear the effect that new housing finance regulations could have on their mortgage businesses. The survey, which was conducted by ""T. Aloise & Company"":www.taloise.com/, showed that 51 percent of community bank executives listed changing compliance standards as their most significant challenge.

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The poll by Ellie Mae focused on mortgage lending operations at 34 community banks around the U.S., and the company posed key questions about the legislative, regulatory, and competitive factors in the marketplace. Additionally, Ellie Mae examined the implementation and use of technology, as well as changes in consumer relationships, organizational structure, and integration as it relates to mortgage divisions.

Ellie Mae's statistics indicated that the smallest community banks, those with less than $500 million in assets, were specifically concerned about the staffing needs brought on by regulatory issues. Meanwhile, mid-sized community banks, those with $500 to $599 million in assets, were most concerned about the impact compliance-related legislation could have on servicing and loan approval processes.

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When asked about industry competition, 53 percent of the banks identified larger financial institutions as their main competitors, while 38 percent cited other community banks and 15 percent cited credit unions. Poll inquiries on technological issues showed that around 75 percent of community banks tap into third-party solutions and that the majority of survey participants stated that their mortgage systems do not interact with other core banking systems, though the larger community banks were more likely to boast better platform integration.

Speaking out on customer relationships, the community banking sector was divided over the influence of online banking, with one-third of respondents stating that web-based tools have improved consumer services and one-third of participants reporting no positive impact from online solutions. However, most of the banks surveyed agreed that their relationships with customers have changed since the housing crisis, and two-thirds of Ellie Mae's respondents noted alterations in consumer communication from 2008 to present.

Community banks were aligned on operational structure for mortgage divisions as well, with two-thirds of participants stating that the company does not have a mortgage-only branch. Ellie Mae pointed out that the size of the community bank does not seem to be a factor in determining whether or not mortgage divisions are integrated into an organization's operations.

Commenting on Ellie Mae's data, Jonathan Corr, chief operating officer for the company, said, ""Handling the regulatory, market and technology challenges is something all banks, from multinational entities to small community banks, are facing. However, gaining insight into how community banks view these challenges and how larger, mid-sized and smaller banks within this segment perceive these challenges is vital for any company that provides services to this market.""