ROCKY HILL, Conn. – With only a little more than a month left to go until the end of 2002, executives at Integrated Loan Services (ILS), a unit of Fiserv Inc., compared notes and came up with their list of forecasts for the mortgage-lending environment in 2003. These are some of the key trends they said lenders should expect to deal with: *Guaranteed prices and RESPA reform: guaranteed pricing will start to emerge as a marketing edge for closings, especially in light of what many industry observers contend is inevitable HUD/RESPA reform. ILS President Lee Howlett predicts that lenders will seek out affiliated business arrangements to provide the bundles services to make this happen because, under the reform, a provider that can bundle all the services of the settlement will be able to more easily guarantee a packaged price. *Interest rates: rates will not only not rise noticeably in 2003, Fannie Mae and other government agencies expect they'll stay about the same as they've been in 2002. This is because the economy isn't recovering as fast as expected. In addition, says ILS EVP Dave Stokes, recent and ongoing corporate scandals will cause an ongoing downward pressure on the market. Add to that the threat of war with Iraq, "you come up with a recipe for stagnant growth and flat interest rates," Stokes said. *Housing market: appreciation will slow in 2003, and properties won't be increasing at the current pace because of the state of the economy. In addition, says ILS, consumers are getting used to the low rates, so they won't have the urgency to take advantage of them like they had in the past. While low mortgage rates put upward pressure on home prices during 2002, ILS Operations Manager Ann Politis said if the rates remain the same next year as they're expected to do, they won't continue to put pressure on prices next year. *Alternative collateral solutions: next year, the increased velocity of the marketplace will force lenders to look at alternative collateral solutions such as value insurance products. In 2003, these products will be particularly attractive to lenders as they look to increase their closing speed and decrease costs. *Multiple AVM portals: expect to see vendors offering lenders the ability to choose from multiple AVM models. In these portals, said Stokes, lenders will be able to choose the AVM model that works for them depending on its hit rate, coverage and quality of valuation in their market segment. *Electronic exchange of data: 2003 will be the year when "true connectivity between vendors and lenders is put into action," says ILS. Politis said, "The dirty little secret about today's technology is that there's a lot more manual work going on than there needs to be. The market velocity has increased the pressure to make true data connections happen." *Loans on the Internet: more lenders will leverage Internet lending as a core channel in 2003. Howlett said that's because there's an increased acceptance of Internet applications by consumers and more Internet options available to them. "Before it was just `shoppers'. Now they want to close on the borrowing options they find on Web sites," he said. *Instant close: expect to see more lenders in 2003 "grabbing for the brass ring of instant equity closings." Advances in loan support products are allowing lenders to do instant decisioning and close home equity loans immediately. *Outsource processing: the refinance boom will end eventually and lenders that increased their backroom capacity to meet demands are going to question whether that upsizing – investing in technology and staff – made sense. In addition, lenders will look for ways to expand their territories beyond their local communities. Outsourcing will allow them to do this. [email protected]