FDIC Creates Privacy Rule Handbook

FDIC Creates Privacy Rule Handbook

November 18, 2001

Online Success: Fact or Fiction?Bill EvansOnline status, Internet, customer service, Alliance Funding, IndyMac Bank, NovaStar Mortgage,
It is impossible to have a conversation with mortgage lenders
without discussing the Internet and the way it impacts the
industry. Most of these discussions have focused on the borrower
because of the perceptions of the broker practitioner. Only a small
amount of attention has actually focused on how the Internet
affects the relationships between wholesale lenders and the
broker/loan officer community. One of the initiatives currently
generating the greatest payoff for both loan officers and wholesale
lenders is providing electronic underwriting status and loan
conditions via the Internet. Lenders are realizing the competitive
advantages that an online status can bring to their total
production and relationship building efforts. Three such companies
are Alliance Funding, IndyMac Bank and NovaStar Mortgage. Each
company has applied a different approach to utilizing the Internet,
all generating positive results. Improved customer service, greater
broker satisfaction, increased efficiencies and an increased
quality of loan submission are some benefits of a definitive
Internet strategy.
Improved customer service is one of the most significant results
of utilizing the Internet as a communications tool. Providing loan
status on the Internet is one method. Brokers and bankers at
Alliance Funding find that loan officers benefit greatly from the
tracking system, which reduces phone time and provides
instantaneous, updated information. IndyMac Bank packages the loan
status as part of e-MITS (Electronic Mortgage Information and
Transaction System). In addition to keeping loan officers
up-to-date regarding the process of their loan, e-MITS provides
immediate online underwriting, as well as risk-based pricing within
three minutes.
"Customers are able to capitalize on the efficiencies and
immediacy that e-MITS provides at the point-of-sale," says Roy
Bollinger, first vice president and director of marketing and
development at IndyMac. "This capability has drawn rave reviews
from our customers."
By allowing loan officers to obtain loan status from the
Internet, internal efficiencies for the lender have been created as
well. Reduced calls to lenders about a loan, combined with their
automated underwriting system, have doubled their ability to
process loans without hiring a larger staff. By handling fewer
calls, account executives are able to foster more involved
relationships with consumers. Similarly, there is a reduction of
status calls at IndyMac, allowing personnel to spend more time
generating new business. e-MITS has allowed IndyMac to focus on the
loans that are most likely to fund.
Alliance Funding has seen an increased response from its
customers as they have become more Web savvy. In addition to
reducing phone time, Alliance has been able to produce more
educated consumers. Customers who use the Internet to view their
underwriting information also find that the site contains a great
deal of rate and product information. Armed with this additional
knowledge, they have a better understanding of which loans they
should submit.
"Customers are educated more quickly and are more likely to send
higher quality loans," notes Rich Doran, senior vice president of
production at Alliance.
Therefore, the question becomes, "How do small- to mid-size
wholesalers achieve similar advantages?" The lenders cited in this
article are among leaders in the industry and have each allocated
significant time and resources to build their own proprietary
systems. Because "survival of the fittest" is a common refrain,
many lenders are eager to capture the same advantages as their
larger counterparts. Most smaller lenders have found developing a
proprietary system to be quite cost-prohibitive. They have also
concluded that without the same resources and economies of scale,
they must seek other alternatives. Mid-sized lenders are then faced
with finding the best way to efficiently utilize the Internet. If
building their own proprietary system is not the most
cost-effective approach, then what is?
Online statusing is an ideal middle step for lenders who want to
use the Internet as a tool, but lack the resources to develop their
own automated underwriting system. As competitive pressures force
the lending community to evolve, technology providers will
inevitably recognize the need to cater to the online statusing
After speaking with these companies, it is clear that there is a
consistently high level of satisfaction with the results they have
achieved from their respective Internet strategies. There has also
been a significant and positive impact to their bottom line, and
their customers have been vocal in their praise of these online
initiatives. These lenders have each raised the bar for the rest of
the industry. It will be interesting to watch as others observe
what the masses do.
Bill Evans is president of the Institute of Professional
Training in Manchester, Wash. He may be reached at (360) 981-4026,
e-mail bevansipt@aol.com, or visit www.billevanspresents.com.