More Data to Chew On

I was thinking about Bill Rice's point that not all mortgage originator cost cutting is cuts to revenue generation capacity and some data that Josh Reich sent me a couple of weeks ago popped into my head.

Below is a chart of relative volume of a couple of Countrywide's origination sources: retail and correspondent originations from July 2006 to July 2007. Retail originations stayed between 31% and 35% of all originations while correspondent originations rose from 38% to 49%.
Why? Maybe Fannie Mae's Mortgage Focus 2006 Executive Summary's analysis of costs of origination suggest the answer (sorry, I don't have a link to the actual document.) Average cost to originate a closed loan in 2006 for the retail channel: $3,581. For the correspondent channel: $2,512. The industry is moving to cheaper ways to originate loans.

My point? The average cost to originate a closed loan for the internet/call center channel was a paltry $1,958. I have good reason to believe that the cheapest sub-sector of internet/call center is lead generation (versus, say, the lender's own site.) As lenders try to originate ever more cheaply in this difficult earnings environment, the most rational way to do it would be to direct more resources to buying leads.