Tower says that mortgage lenders in both markets are presently changing their approach to business on a fundamental level. Mortgage origination has typically been viewed as a domestic business, with local brokers and retail loan officers sourcing loans that are underwritten by local or regional lenders. But Tower says global financial services institutions are now expanding their mortgage lending operations across borders through acquisitions and joint ventures.
Tower says that, as a result, mortgage lenders will be increasingly affected by international banking regulations such as Basel II.
Tower believes that the Accord will have important implications for mortgage lenders in the US and the EU, including driving greater consolidation among lenders. The consultancy also says that Basel II’s goal of increased risk transparency will eventually lead to more accurate and equitable valuation of mortgage credit.