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Old Idea, New Industry: ERP and Mortgage Lending Automation

National Mortgage Professional
Dec 05, 2004

Bundled services gaining traction in the marketplaceSteve Grant bundled services, credit information, customer service Bundled services are a growing trend in the credit information industry as providers seek to gain a business advantage by assembling essential services into easy-to-use packages that can help brokers serve clients faster and more effectively. The benefits they provide in terms of speed, convenience and cost will help mortgage professionals differentiate themselves in today's highly competitive market. Clearly, bundled services are the way of the future. However, before we continue, let's define what the term means. It includes the following: •Full title products •A full range of settlement services •Automated valuation models (AVMs) •A full range of appraisal services •Credit reports •Flood reports and other services "This approach offers clients a one-stop solution that will be cost-effective and offer great flexibility in terms of the services lenders can offer their customers," said Michael Cohan, president of Unisource Information Services, a Pittsburgh-based title information company. "These packages will allow clientsbanks, credit unions, mortgage brokers, mortgage lendersto close more loans faster. They also will dramatically reduce clients' 'turn time' and ultimately improve their bottom-line performance." Technology and service critical Another key benefit involves meeting consumer demands for greater simplicity in all financial transactions. That includes simplifying compliance with the Fair and Accurate Credit Transactions (FACT) Act by offering automatic delivery of credit score disclosure and Notice to Home Loan Applicant to lenders or borrowers. In addition, technology-driven bundled services can shorten loan processing times and give lenders the ability to handle multiple requests for information quickly and seamlessly. The message is clear: Mortgage companies that use credit information firms that offer one-stop solutions will be able to serve clients more effectivelyand profitablyand emerge as market leaders. "Information services are becoming more sophisticated as borrowers demand greater speed in loan processing," said Randall Nachman of Broker's Home Mortgage Services & Support, a Metairie, La.-based mortgage lending company. "As lenders, we are finding that we must evolve technologically if we are to meet our customers' needs. That's why we look for advanced technological solutions in the products and services we purchase." Windy White of Atlantic National Mortgage in Westport, Conn., agreed. White said her firm requires services "that can help us expedite our processes, whether that's through credit reports, flood services or other technology-based products. The key is to reduce turnaround time and improve productivity, which is what we believe bundled services will deliver." Product functions important Web-based technology has made it possible to offer a range of products that perform multiple functions such as: Mortgage loan reports (MLRs) MLRs gather credit-based data on equity lending and refinancing, identify mortgage-secured liens and allow loans to close in a matter of hoursnot days. They have proved to be an economical alternative to the traditional title search. Equity report This tool combines the MLR with elements such as credit worthiness, property value and flood data, and provides a 30-second decision at half the price of similar vehicles. Flood reports As databases have become more thorough and extensive, brokers can get these reports almost instantly as part of credit ordering and other packaged services. Tax verification reports (TVRs) TVRs help reduce fraud by comparing income-related data on a borrowers tax returns with Internal Revenue Service files, presenting any discrepancies in a detailed report. Mortgage Credit Link (MCL) and Settlement Services worksheet MCL is a Web-based product that combines key settlement services, including TVRs, flood zone determinations, AVMs and identity verification, as well as the worksheet, which provides a unique method of ordering and managing bundled mortgage service products. Multi-faceted or bundled? Credit information companies can provide these services instantaneously, either individually or in some combination, depending on the customers needs. The benefits are clear: •Title searches have been cut in half •Mortgage loan reports are now generated in about 30 seconds •Tax return information can be verified with the Internal Revenue Service in less than 72 hours As a result, brokers can dramatically reduce closing times on most loans while ensuring that all applicable standards and government regulations are met. Still, some in the industry consider these as multi-faceted products and not truly bundled services. "To my way of thinking, you achieve bundling when a vendor can submit a set of services for one fixed price," said Daniel Jacobs of Charlotte, N.C.-based 1st Metropolitan Mortgage. "That will streamline the process and ultimately cut costs. Im pleased to see that some credit information companies are taking steps to provide a range of technology-based products such as credit reports, AVMs, floods and others in a unified package." Simplification a key driver Jacobs believes that the mortgage industry is definitely headed toward bundled services. He said that what's driving this trend is consumers desire to simplify financial transactions and other aspects of their lives, and technology's ability to meet those demands. In turn, he believes that those companies with the best and most adaptable technology will be the ones best able to succeed in this new environment. Innovation, responsiveness seen as essential That is a sentiment echoed by Cheryl Parish of Pine State Mortgage, who said that her company is trying to move vendors in the one-stop direction as a way to serve borrowers more effectively. "We rely on companies that can combine leading-edge technology with great flexibility and customer service," said Parish. "Looking ahead, we want our vendors to develop technology that we can share seamlessly without having to do a lot of swapping of paper back and forth. That is the promise that bundled services hold for the mortgage lending industry." Partnering builds competitiveness Credit information companies are working collaboratively with mortgage professionals to integrate packaged solutions by expanding the use of existing technologies and developing new products and systems. Customer support, therefore, will play an important role in making bundled services viable. "While technology is extremely important, an intense customer focus is absolutely essential to a strong client-vendor relationship," said Kathy Lovece of Continental Capital Corporation, New Yorks largest independent mortgage banker. Lovece said that bundled solutions should provide her company with the speed and flexibility it needs to serve borrowers efficiently and cost effectively, and added, "Right now, we order credit reports, floods and social security verification reports individually. In the future, we will want the ability to have those services conveniently packaged and competitively priced. That's extremely important to a competitive business like ours." What it takes to succeed 1st Metropolitan Mortgage also puts a premium on technology, flexibility, strong customer focus as well as the ability to customize services to meet client needs. "There is no question that bundled services will improve our ability to service clients," said 1st Metropolitan's Jacobs. "They will reduce costs, streamline our processing abilities and help us close loans more quickly. That said, we are seeking solutions that will require not only technical capabilities but also strong operations support. We expect our vendors to have departments that talk to each other so they can serve us effectively." It is clear that most customers want the convenience, speed and flexibility that bundled solutions offer. The key for mortgage brokers will be to find a credit information company that meets the bundled service challenge and remains squarely focused on serving customers' needs. In today's highly competitive world, such actions are vital to prosperity and survival. Steve Grant is president and CEO of Credit Plus Inc. He can be reached at (800) 258-3488 or e-mail [email protected]
Dec 05, 2004
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