New lending concept increases revenues.

A new wholesale lending concept has helped Kings Mortgage Service increase revenues by 33 percent per employee. The key to these improvements is the utilization of a new service in which a single employee of the wholesale lender located inside the broker's office completes the entire process - underwriting, document preparation and funding.

This approach is more efficient because fewer hands touch each loan, communication with the wholesale lender is improved and the broker is given the ability to prioritize loans. As a result, Kings Mortgage has been able to increase the number of loans closed in 30 days or less from under 50 percent to over 75 percent of loan volume. The ability to turn around high-priority loans from inception to closing in five days or less has helped to save deals and win referrals from the brokers involved.

Kings Mortgage Services, Inc. is a leading mortgage broker servicing all of California from four offices in Kings County, Fresno County and Kern County, California. The broker offers a full line of loan products at competitive interest rates and strives to provide quick approvals and exceptional service to those customers purchasing or refinancing homes. Loan products include FHANA, conventional, jumbo, debt consolidation, home equity, home improvement and more.

In the past, Kings Mortgage Services placed loans with wholesale lenders that utilize the traditional process. Typically, an account executive solicited the broker for business, a clerical assistant set up the loan file and passed it to an underwriter, who established conditions, then handed it off to another person to clear those conditions, and so forth. So many different people touched the average loan that the process took a considerable period of time, and mistakes were possible because of miscommunication. In addition, after leaving the broker's office, it was very difficult to obtain information about the file's status. Kings' staff often joked that the loan fell into a "black hole" from which it emerged only after it was ready to close. The burden was always on the broker to penetrate the wholesale lender's structure in order to get answers to their questions or, when necessary, interrupt the process to make changes.

Another problem with this approach was that it worked on a first-in, first-out basis rather than according to Kings' priorities. In any brokerage there are situations where the ability to process a loan quickly can make the difference between making or not making a deal. In this situation, Kings' staff members tried to communicate with the lender to speed up the process, but because of the number of people involved, they usually gave up in frustration. Managers of the brokerage were uncomfortable with the fact that as soon as the file moved to the lender's office, they gave up control over the level of service provided to customers, often compromising their own high standards.

Then Kings managers heard about a unique approach in which the wholesale lender trains experienced mortgage professionals, usually underwriters, to complete all of the tasks on a loan, including underwriting, drawing documents and funding, and locates them directly inside a mortgage broker's office. These individuals are equipped with software that allows them to complete every aspect of the decision-making process with one initial set of data input. Kings Mortgage contacted the wholesale lender that pioneered this process, ComUnity Lending of San Jose, California (www.comunitylending.com), and made arrangements for a "mortgage master," as the new breed of mortgage professionals are called, to be located in their office. Along with the Mortgage Master, ComUnity Lending provides exclusively for the broker a variety of automated underwriting systems, such as FNMA's Desktop Underwriter, FHLMC's Loan Prospector and other conduit specific automated underwriting systems, such as RFC's AssetWise.

Kings was not required to sign any contract or pay any upfront costs. Both parties agreed on a handshake to continue the arrangement as long as it is mutually beneficial. The mortgage broker was asked only to sign two covenants: not to solicit the mortgage master for employment; and to respect the copyright nature of the lender's software. The mortgage master remains an employee of ComUnity Lending, yet is totally dedicated to the broker in whose office they work. ComUnity Lending provides the computer equipment needed to underwrite, lock, draw and fund loans on site in the broker's office. Kings provides office space, use of a copy machine and enough loan volume to make the arrangement worthwhile.

The first mortgage master to work at Kings Mortgage had learned the assessment skills necessary to make an informed risk decision by working as an underwriter. ComUnity Lending provided training in the mechanical skills associated with committing, drawing and funding a loan. The mortgage master was also trained to operate the software system that produces the loan documents. This training included how to prepare the document package for title and, upon receipt of the executed documents, review the final closing papers, balance the loan funds with the title company and deliver a completed loan file to central support for post-closing functions. Prior to placement, the mortgage master visited Kings Mortgage to ensure that both parties were comfortable working together.

Locating the mortgage master in Kings' office has streamlined the firm's ability to process loans and makes it possible to provide superior customer services. The loan file never leaves Kings' office. Loan officers only have to deal with one person, and that person has complete information on the status of their loans, as well as the power to cut through red tape when necessary. If the loan officer needs something, they can simply walk down the hall to the mortgage master and ask face to face. Instead of waiting three or four days to clarify lending conditions via fax, e-mail or phone tag, critical issues are solved in just a few minutes.

This quick approach is often the deciding factor in a real estate transaction. For example, shortly after King Mortgage Services began using the mortgage master, a realtor presented a loan that was unable to be processed in a timely manner by another lender in town - thus jeopardizing the entire transaction. As a final attempt to salvage the deal, the realtor presented the loan to a Kings Mortgage Services loan officer. The loan officer was able to quickly resolve several credit and employment questions with the in-house underwriter and brought the loan to closing only five days after it was presented. Both the customer and the realtor were thrilled to complete the transaction and Kings Mortgage Service is regularly referred additional business from the realtor.

Customer service has also improved. The broker now has complete control over the experience that its customers receive, and can monitor service and approval performance to increase customer satisfaction. Because most wholesale lenders are centralizing operations to cut costs, Kings Mortgage Service partnered with ComUnity Lending to introduce a value-added service to meet specific customer requirements.

Once it became obvious that the arrangement was working out, Kings management added a second mortgage master in another office and is considering adding a third. The net result has been a substantial increase in business volume without increasing expenses. One reason is simply that processing loans more quickly frees Kings' staff to seek additional business. The average number of loans closed by each loan officer has increased approximately 33 percent since the mortgage masters have been in place. In addition, the superior service that the mortgage master concept provides has led to additional referrals from realtor, banks, credit unions, accountants and attorneys.