The economic justification for outsourcing in mortgage originations is generally thought of in terms of the historic cyclicality of the underlying mortgage business. The source of this historical variation in mortgage originations emanates from the seasonality in the home purchase market and interest rate moves in the refinancing market. But the business has experienced radical changes in the last decade and the historic behavior of the market has been overwhelmed by periods of paucity and demand from the financial crisis and the responses to it. As we absorb ongoing industry changes such as HARP 2.0, and its impending demise, to the risks inherent in pending qualified residential mortgage (QRM) rules, the horizon is full of unforeseeable shocks in mortgage origination demand. With these changes in the market have come new demands on market participants. Economic and policy shocks have brought the role of outsourcing to a new and distinct level.
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