Problem Session 4 - Framing and Structuring Decisions

If only we knew which mortgage if only we could

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Unformatted text preview: ave direct access to mortgage origination. loans are at risk of default, we could determine our portfolio mix. If only we knew what future interest rates and housing starts would be, we could better segment the market. If only we had an innovative If only we had a technology that was easy to use and provided credit-risk creditscores to us, but not to our competitors. product that appealed to the high credit-risk segments. credit- Copyright 2009 by Burke Robinson, LLC 22 11 Strategy tables flesh out decision challenges. Key Decisions Strategy Theme Federal Charter Direct Channel Credit Risk Policy Aggressively pursue all credit risk segments with tailored packages Loan Portfolio Mix Technology Development Current Agree to tighter restrictions in exchange for more favorable interest rates Do not pursue Provide incentives Provide incentives to encourage to encourage others others to pursue to pursue All brokered 1/3 retained Selectively Selectively pursue targeted pursue targeted higher credit risk higher credit risk segments segments Accelerate Accelerate investment in investment in proprietary proprietary technology technology Proactively Cherry Pick Hybrid Online CustomerFriendly FM Maintain status quo Aggressively Aggressively lobby for lobby for looser looser restrictions and restrictions greater direct and greater access direct access Abandon charter altogether Selectively pursue to transform low production segments 50/50 split 50/50 split Maintain current proprietary technology Stay with highest quality loans only 2/3 retained Tighten current credit risk policies to avoid any risky mortgages Share selective technologies with originators Express Package and Ship Aggressively pursue all segments All retained Make all technology available to all retail customers Copyright 2009 by Burke Robinson, LLC 23 Decision diagrams display key uncertainties and their significant relationships. relationships. Credit Risk Policy Credit Risk Management Credit Risk Annual Residential Resales Annual Housing Starts Residenti...
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