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Special Reports
Electronic Documents
'Scaling and Sharing' Suggested by Executive
By Anthony Garritano
Right now, originators are cutting back and looking for costs savings that can
be achieved without raising risk. A good mix of automation, outsourcing and foresight can make all the difference.
"Originators are looking to grow revenue by optimizing the customer relationship while reducing cost and risk,"
noted Ruth Thompson, a senior principal at Wolters Kluwer Financial Services. "Second, they need to develop
a flexible approach to convert fix cost to variable cost to match the market now and as it begins to improve. Lastly,
they have to maintain customer service levels, while cross-selling across lines of business."
One solution, according to Ms. Thompson is creating a single content repository
to support loan product across the entire organization to better serve the customer. Making matters worse the MBA
has reported that production profits fell to a negative $50 per loan in 2006 from a positive $258 in 2005. In doing
so the MBA gave mention to the fact that a cost factor was "particularly personnel costs".
"Knowledge workers are expensive but, when people think about outsourcing
and personnel costs they tend to think only about lower-level workers," said Ms. Thompson.
"I would challenge that thinking to include knowledge workers who manage
compliance and content often without good technology tools to support their efforts. Leveraging trusted providers
with the technology tools and the subject matter experts to manage compliance and content is less risky and will
cost less as the cost is spread among many.
"Managing compliance and content is not a place where a lender is going to
have a differentiator in the market. By all accounts, consumers are saying service is going to make the difference
and be a place where lenders should spend their efforts. Market compression means scaling and sharing resources
among various channels to reach the customer.
"As mergers and acquisition create more complexity, originators should consider
a common platform to manage loan products across the company," advised Ms. Thompson.
"This is an operations and frankly a compliance challenge when dealing with
a merger or channel reduction, moves and changes. Other considerations today include new market challenges, i.e.
fewer loan products doesn't mean less to manage, because for one, there are now more stringent laws to deploy across
channels."
One way to eliminate potential problems is to embrace Web services and put pressure
on the vendor to embrace industry standardization through MISMO. For optimal customer retention, originators should
consider embracing architecture or integrations that can deliver common content for a mix of loan products and
growing required state specific initial disclosures.
Ms. Thompson suggested a process flow that would include initial electronic disclosures
that the customer can e-accept with a paper out fail-safe within 48 hours if the customer doesn't e-accept to meet
regulations. "The best alternative is to consider outsourcing the management of compliance content and changes
for loan products for all of your channels. Outsource process, procedures, technology that do not make you money
and create risk internally such as doc prep. You can still have loan product differentiators, though. Your custom
content and loan products are also managed inside the DesertDocs software and segmented away from your competition.
"Consider that in down market in-sourced solutions are expensive carry fixed
costs regardless of volume. An outsourced solution lowers your costs when volumes are down but can fully support
you when the market improves without having to ramp up internal resources. If you work with trusted compliance
content providers who have the knowledge workers and the technology to support you, you get the benefit of costs
spread cost across many lenders."
What makes Desert Document Services, a Wolters Kluwer Financial Services company,
different from the others who tout a solid data-in and docs-out approach? "A best practices method that combines
processes, procedures and technology with the knowledge workers who have tools to keep risk under control,"
answered Ms. Thompson.
"DesertDocs understands that clean and concise data with compliant content
needs sophisticated content management tools to keep it straight. We have been called in to assist lenders who
have not have the resources or time to update to the latest installment from their compliance source or they tried
to keep it all straight in a spreadsheet.
"Originators should also consider that Wolters Kluwer Financial Services
is backed by the financial strength and resources of our parent company, Wolters Kluwer is the third largest information
services provider in the world. This means we have the capital and resources to continue to invest, grow and best
serve our customers in the mortgage industry. Additionally, that financial strength allows us to offer industry
leading compliance warranties to our customers. Further, more than 75% of mortgage loans closed in the U.S. are
documented with one of Wolters Kluwer Financial Services' solutions. And 90 of the top 100 U.S. lenders use one
or more of our compliance analytics solutions, which illustrates our ability to deliver consistently reliable compliance
solutions, but also allows us the opportunity to leverage the strong voice of our customers in developing new solutions.
"Our technology solutions are also fully integrated into our customer's systems
and are offered as hosted Web services. They can also 'stand alone' to meet their specific business model preference.
Through our integrated solutions we also help our customers identify and address compliance and operational risks
as they arise before closing, working to reduce post-close concerns. Expertise matters," she concluded.
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