Title: An operational framework for mortgage supply chains

Authors: Juri Hirschey, Patricia Wescott, Nezih Altay

Addresses: SunTrust Mortgage, 901 Semmes Avenue, Richmond, VA 23224, USA. ' The Federal Reserve Bank of Richmond, 701 East Byrd Street, Richmond, VA 23219, USA. ' Department of Management, DePaul University, 1 East Jackson Blvd., Chicago, IL 60604, USA

Abstract: Operations management in the mortgage banking industry requires a strategic framework that takes into account the industry|s volatility, operational complexity and unique customer model. The foundation of this framework begins by (re)defining the mortgage lender|s customer to include the capital markets. This paper proposes a novel model for managing mortgage banking operations, a model that uniquely reveals two different but intricately related supply chains in mortgage operations. The proposed dual-direction supply chain model offers speed and flexibility with one supply chain and integration and market knowledge with the other – the combination of which is critical to developing an effective hedge against uncertain demand. In addition, the paper incorporates legislation recently passed by Congress and its implications to our models. The paper offers concrete suggestions on how to apply various improvement strategies within the proposed model for efficient yet responsive operations in the mortgage banking industry.

Keywords: financial services; mortgage banking; mortgage supply chains; banks; mortgage lenders; operational frameworks; supply chain management; industrial volatility; operational complexity; customer models; loans; capital markets; dual-direction SCM; speed; flexibility; integration; market knowledge; uncertain demand; legislation; US Congress; USA; United States; improvement strategies; operations management; supply chain modelling.

DOI: 10.1504/IJSSCI.2010.035762

International Journal of Services Sciences, 2010 Vol.3 No.4, pp.319 - 341

Received: 17 Jun 2009
Accepted: 18 Jun 2009
Published online: 03 Oct 2010 *

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