BenchMark Consulting International Announces Key Findings of the 2003 Home Equity Lending BenchMark Program.

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ATLANTA & SAN DIEGO--(BUSINESS WIRE)--Oct. 20, 2003

Despite Increased Volumes, Lenders Focus on the

Overall Customer Experience

BenchMark Consulting International, a leading international management consulting firm to the financial services industry, has completed its bi-annual Home Equity Lending BenchMark Program. The 2003 Home Equity Lending BenchMark Program captures lender volumes from the first quarter of 2003 and provides participating organizations with key findings in every area of lending operations and evaluates performance, efficiency and effectiveness against industry peers.

"For home equity lenders, 2003 was a year to handle increased volumes and continue to refine the strategies, policies, business processes and technology enablers in their business models," said Cheryl Yaeger, president of BenchMark Consulting International. "The record volumes in home equity lending can be attributed to the current interest rate environment and the fact that home equity-lending products continue to be the consumer-borrowing product of choice for those with equity in their homes."

The program reveals that lenders are focusing more on the overall customer experience and are refining their business processes to enhance it. However, turnaround times were longer due to increased application volume during the program period.

"A trend that could impact the overall profitability of lender home equity products is the reduction of the duration of home equity loan and line of credit assets on the books," said Jim Leath, consumer lending practice manager for BenchMark Consulting International. "While this could be a function of the extraordinary rate environment, lenders should take a closer look at loan and line portfolio duration and determine if there may be product features or other strategies that could improve this negative trend. The good news is while asset duration on the books is shortening, the average balance of home equity accounts continues to rise."

Traditional home equity term loan volumes continue to diminish as lenders push line of credit products and consumers embrace the continued availability of the revolving line of credit. The challenge lenders are facing with home equity line of credit accounts continues to be low borrower utilization rates that, for the last three years, have been no higher than 43 percent.

With the branch channel remaining the dominant volume channel for traditional bank home equity lenders in the BenchMark Program, there has been an increase in the number of home equity accounts booked by branch location.

The key factor this year for application processing is that technology seems to be the driver of performance once policies, business processes and staffing are aligned for high performance. The significant attribute is the automation of ordering vendor documents and the subsequent population of data into the system.

The use of automated credit decision and collateral/final decision approvals for underwriting continues to be an opportunity for lenders to enhance underwriting performance. Automated delivery of the decisions to the sourcing banker is also a characteristic of high performance.

For document preparation, closing and funding, a surprise finding was the positive impact of "close by mail" packages on performance. This strategy promotes the "self serve" approach to closing and gives the branch some found time in the process to concentrate on other opportunities. The data also suggests that lenders offering the "close by mail" option do not experience any higher package exception rates than lenders only offering face-to-face closings. Interfaces and automated data entry also played a key role with high performers.

Image-enabled workflow ranks high in reviewing documents in a split screen paperless environment for review and booking. All closing packages are delivered from the closing table to a central imaging facility, as a result, this removes delays generally associated with paper package movement.

Account administration and servicing continues to be driven by automation, follow up time set for perfection, ensuring clean payments do not make it to the exception payment processing group, and the paid loan collateral release policy.

Blending the aging approach for early stage collections with the account ownership approach in late stage collections is contributing to the enhanced success of high performers in collections for 2003. Lenders also benefit from a renewed focus on very specific collector training initiatives along with collections effectiveness reviews that rate individual collector performance based upon necessary call content.

Regarding bankruptcy, the best way lenders are processing bankruptcies include the electronic notification of filings from either a service or direct from the courts. Adding an interface to populate the bankruptcy system, as well as having a separate bankruptcy system, separates lenders from the pack.

Top performers in foreclosures have separated the loss mitigation unit from the collections area and report directly into foreclosure. In addition, most are utilizing a dedicated foreclosure system interfaced to the host and external vendors with electronic access to attorneys.

Recovery reveals that high performing lenders are utilizing recovery scoring and then applying differential treatment accordingly.

Other findings of the program include:

-- Lenders continue to reduce their willingness to offer products

with loan-to-value greater than 100 percent without focused

product strategies to reduce credit risk.

-- Lenders continue to approve and book deals with higher credit

scores than in previous BenchMark programs.

-- Lenders are better equipped with information to understand the

impact of their direct marketing campaigns.

-- Lenders continue to invest in technology to support their

business efforts with each core process having some dominant

vendors in each category offering.

-- Lenders could benefit from greater use of staffing and

forecasting models in managing staff to volume on an ongoing

basis.

BenchMark Consulting International has added a core process composite ranking based upon each lenders efficiency, effectiveness and salary cost per unit to balance the three major components of the home equity business. These three measures are then used to rank order each lender by core process, by process group and overall to determine which lender is best "balancing" these factors for high performance in home equity lending.

About BenchMark Consulting International

BenchMark Consulting International has specialized in improving the financial services industry since 1988. The company is a management consulting firm that improves the profitability of its financial services customers through the delivery of management decision making information and change management services to realize the benefits of business process changes. BenchMark Consulting International's expertise is in the designing, managing and measuring of operational processes.

As of 2002, the firm has worked with 19 of the top 20 (in asset size) commercial banks, all 11 automobile captive finance corporations, several of the largest consumer finance corporations and many regional banks throughout the United States. Internationally, BenchMark Consulting International has worked with the five largest Canadian commercial banks, more than 20 European organizations in eight different countries, in addition to financial institutions in Latin America and Asia.

The company is a wholly owned subsidiary of Fidelity National Financial, Inc., a provider of products, services and solutions to the real estate and financial services industries. BenchMark Consulting International has dual headquarters in Atlanta, Georgia and Munich, Germany. For more information about the company, visit the Web site at www.benchmarkinternational.com.