It is more of an individualized approach to analyzing consumers credit history, using their credit histories, mortgage repayment track records, employment stability, increasing collateral values and FICO scores. Such lending allows an institution to offer variable rates based upon the strength of the borrower. It requires more sophisticated modeling and more underwriting, but we believe it will come into its own in 1999. Next year will be the one in which one product, Microsoft Home Advisor, will change the way real estate is sold. This is a consumer-oriented total solution for real estate purchasing, financing and even just looking for a home.
Consumers can use it to learn terminology and the how-tos of buying a home.
It helps them search for neighborhood information, find financing and even apply on-line for a mortgage. That financing may be from a bank three time zones away, but consumers will trade convenience for a local banking relationship. This product was introduced in July 1998 and we anticipate the emergence of similar products next year. Several real estate brokerage firms have them in the works and we expect them to turn mortgage banking into a commodity as opposed to a service in 1999. We forecast that rates will not go any lower in the first half of 1999.