In recent months we have seen a reassessment of the problems of maintaining adequate monitoring and incentives in the lending process, with investors insisting on tighter underwriting standards and some large lenders pulling back from the use of brokers and other agents.
We will not return to the days in which all mortgage lending was portfolio lending, but clearly the originate-to-distribute model will be modified – is already being modified – to provide stronger protection for investors and better incentives for originators to underwrite prudently.