A Primer on Geographic Information Systems in Mortgage Finance

This article provides an overview of Geographic Information Systems (GIS) and the issues surrounding their use in mortgage finance and related industries. After a brief introduction to GIS and geographic data, the application of GIS technology to mortgage finance is explored. The article also examines organizational challenges in developing in-house GIS capability. GIS’s greatest potential contribution is to credit, property, and agency risk management; marketing; regulatory compliance; and research and development. It is less useful in managing prepayment risk and less still in managing interest rate risk. Most existing applications draw heavily on spatial database management and map support functions of a GIS, with little emphasis on its spatial analytical capabilities. Prototype applications and research and development applications, however, draw on more powerful spatial analytical methods such as spatial statistics, spatial econometric modeling, and optimization methods. Spatial research is critical in building next-generation mortgage finance business applications.