1.1 Introduction
Mortgage banking generally involves originates, purchases and sales through the secondary mortgage market. A mortgage bank can retain or sell loans it originates and retain or sell the servicing on those loans. Through mortgage banking national banks can and do participate in any or a combination of these activities Banks can also participate in mortgage banking activities by purchasing rather than originating loans. The mortgage banking industry is highly completive and involves many firms and intense competition. Firms engaged in mortgage banking vary in size from very small local firms to exceptionally large, nationwide operations commercial banks and their subsidiaries and affiliates make up a large and growing proportion of the mortgage banking industry.
As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Research hypothesis and questions, Limitations of the Study and Definition of technical terms.
1.2 Background of Study
Mortgage banking activities generate fee income and provide cross-selling opportunities that enhance a bank’s retail banking franchise. The general shift from traditional lending to mortgage banking activities has take place in the context of a more recent general shift by commercial banks from interest income activates to non-interest, fee generating activities. Depository institutions have traditionary originated residential mortgage louns to hold in their loan portfolios and mortgage banking is a natural extension of this traditional origination process. Although it can include loan origination mortgage banking goes beyond this basic activity. A bank that only originates and holds mortgage loans in its loans in its loan portfolio has not engaged in mortgage banking as defined here.
In our society today the use of computer especially in banking sector of the economy have been so eminent, nearly all banking or financial institutions have computerized their banking operation. The major reason or the fact has been using computer to manage the flow of information within the institution. This is lightly necessary since the survival of any institution including the financial institution like commercial Banks, mortgage Banks Insurance computer etc. depend much on a viable information system. An information system that enables the users to track necessary records and transaction related to the institution in a possible minimum time. Apart from using computer in ensuring a viable information system (IS), error prone information by extensive mammal data mentioned and many others to perform the entire task mentioned and many others have been enhanced by the application software. Application software are programs that direct the performance of a particular use or application of computers and computer networks to meet the information processing needs of end user. This is to say without the application software a computing system is incapable of performing the user task. This is often referred to as computerization. The following section of the project report present the feasibility of computerizing the operation of mortgage banking.
1.3 Statement of Problem
The larger challenge facing lending institutions today is the is the lack of system and processes that track, and analysis data effectively. The loan origination process generates massive amounts of data that needs to be managed by the asset management finance and servicing functions, key management reporting and data analysis capabilities are critical in dealing with issues and quantifying trends in delinquency rates and tracking of compliance metrics-basically the bulk of mortgage banking operations. In addition, these functional areas are responsible for meeting the disclosure requirements of investors, regulatory and rating agencies.
In addition many banks are still performing many processes semi-manually. For example to produce data for monthly servicing valuations, hedging, tax, management reporting and forecasting, banks extract data from multiple systems often residing in different locations or individual PCS After this laborious process the data is manically consolidated in spreadsheets resulting in another significant resource and time drain, along with the potential for human error. By the snapshot view that is weeks bland and prone to errors. Overall these inefficiencies increase the cost of operations, risk and potential loss to the mortgage company
1.4 Aim and Objective of the Study
The main aim of this study is to design and implement a Computer Based Mortgage Banking System. In achieving this aim, the following specific objectives were laid out as follows to simulate banking operation in order:
- To develop an application software to perform those manual task or data processing and analyses using computer.
- To design application that will provide an information technological option the use of computer in handling the mortgage loan origination and it’s servicing in mortgage banking operations, to deliver an effective and efficient data storage, retrieval processing and reporting.
1.5 Significance of Study
The study would be beneficial to mortgage bank and government agency incharge of mortgage institution and capacity building for small and medium scale enterprises, especially and they utility the finding of this research as basis for policy formulation. The study would also contribute to the existing knowledge on the problem and prospect of mortgage bank in financing small and medium scale enterprises. The study will also be a spring board for further research.
1.6 Scope of the Study
The scope of the problem centered on the difficulty and time constraint with the manual system in producing the required report associated with the loan origination and servicing in the mortgage banking operations.
1.7 Limitations of the Study
During the course of this study, many things militated against its completion, some of which are:
- Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
- Establishment Policies: Establishment policies posed a serious limitation as most staffs are not ready to release information needed for this project work. There were lots of information needed from the staffs of this institution to enhance the study which took them time to release or they did not release at all for security purposes, hence the scope was reduced.
- Research material: availability of research material is a major setback to the scope of the study.
- Frequent power failure: This made the researcher append more money on fuel to ensure sustainable power.
- Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet).
1.8 Definition of Terms
Debt: An amount of money, a service, or an item of property that is owed to somebody
Loan: An amount of money given to somebody on the condition that it will be paid back later.
Lending: To allow a person or business to use a sum of money for a particular period of time, usually on condition that a charge interest is paid in return
