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Partnerships bridged with technology.

Putting state-of-the-art technology, already bought and paid for, in the hands of your outside business partners is one way to build loyalty. In this case, it's a strategic move by a leading wholesaler to put transaction speed and instantaneous communication in the hands of its brokers. The idea is to equip a select corp of brokers who bring a steady stream of repeat business right to your door.

Yogi Berra once said, "When you come to a fork in the road, take it." O Yogi was a wise person and very astute in the ways of the world. He also knew when to pick up a stray fork when he found one. O Well, nowadays, wise and astute mortgage bankers must also recognize that same fork in the road. And guess what? The fork is there, right in front of us. The question is, are we astute enough to take it?

Desire to integrate

Since the beginning of the computer age, mortgage lenders have envisioned the day when technology could link them directly with their many varied clients. Over the years, business partners on all sides of the transactions that make up the mortgage lending process have longed for the ability to communicate with each other electronically.

Up until now, the reality of this integration was mainly being realized in the communications among lenders and credit bureaus and appraisal companies. But with new Mortgage Bankers Association of America (MBA) and American National Standards Institute (ANSI) standards being developed and implemented, the industry has added to its information age venue another category of electronic communications--with mortgage insurance (MI) companies. The potential for broadening this electronic dialogue even further is great, as representatives of the industry are currently working with several other groups of information suppliers. Each and every application has added significant productivity gains that translate to lower costs and improved profitability.

The next step

Although the ability to communicate with information suppliers is vital to our industry, the next logical step is to move beyond these applications and begin to provide a more meaningful communications link between the mortgage company and its customers--the wholesale broker, correspondent lender, real estate agent and the consumer.

A few mortgage companies have seen the need to bring their business partners closer to the fold by establishing a direct electronic link. Their vision was to provide 24-hour access to current data on loans in progress. In addition, the new technology would eliminate "phone tag," improve customer service to all parties and save several steps, thereby cutting processing times by days or even weeks.

The keys to successfully apply such a strategy are to:

* Add value--Build systems that help your business partners do their job better and enable them to pass that improved service on to their clients. In addition, tie them into specialized services such as expert underwriting systems that keep them coming back for more innovations.

* Improve service--Your business partners should be able to declare the end of the era marked by telephone tag, slow-moving mail correspondence and waiting for return calls. Immediate access to loan information gives the partner more power and control over the loan process and enables them to appear more like a "direct" lender.

By creating these tools, mortgage companies can build relationships and promote loyalty with their business partners. Without these relationships, it will be extremely difficult for mortgage companies to survive in the 1990s. Bargain basement pricing of products can only go so far. If the service level doesn't exist and the loans in the pipeline can't be funded, it doesn't matter what the price was. These tools, although far short of maturity, are the beginning of future technology.

Tentative beginnings

In 1988 and 1989, the former Citicorp Mortgage, Inc. rolled out its new MortgagePower Plus (MPP) software to the real estate industry. The initial areas covered were New York, Pennsylvania, Delaware and New Jersey.

The software had three major capabilities. The first was to help customers determine what kind of loan they wanted. You could plug in all types of hypothetical data and play "what if" games.

Buyers could decide if a fixed-rate loan was better for them than an adjustable-rate loan. Loan features such as assumability or convertibility could be added to the profile of desired attributes. As the customer added or subtracted features, the rates, points and monthly payments would change accordingly. The idea was to provide a system to compare and contrast Citicorp's current product offerings.

The second feature was the prequalification module. By entering a minimal amount of data, the buyer could be qualified in minutes because the computer did all the calculations based upon program guidelines.

The third and last function was the most dramatic. MPP actually gave a loan commitment that was legally binding on Citicorp. The commitment was issued in as little as 15 minutes--even if the customer had not been preapproved. By entering as few as 20 pieces of information from the application, the system did the rest of the work.

While the agent sat beside the potential customer, Citicorp's mainframe computer pulled the credit report and analyzed it along with the entered application data. Assuming the customer was approved, the system would print out the good faith estimate, the truth-in-lending statement and a loan commitment, contingent only on the appraisal.

The software was designed to provide a fast, firm decision to the house hunter as well as to the real estate agent. With such assurance, the agent then knew he or she had a firm buyer and could proceed to take the house off the market. Dubbed "the 15-minute mortgage" the premise certainly caused a fair amount of envy and some degree of concern as well throughout the mortgage industry.

Regardless, this simple fact remains: The idea of providing your business partners with tools to help them be more productive, and to add value for their customers, is the right direction to take. This fact was not lost on some of the most astute mortgage companies.

One such company was Countrywide Funding Corporation. Countrywide, based in Pasadena, was the largest residential lender in 1992, originating $30.5 billion, almost twice the single-year volume record set by Citicorp in 1986.

In mid-1992, Countrywide began to develop the ideas, concepts and groundwork for a product that its designers felt would be the ultimate in business partner integration as far as the mortgage business is concerned. After almost a year in the making, the product was unveiled at the National Association of Mortgage Brokers conference held this June in Denver.

DirectLine Plus

Countrywide's DirectLine Plus gives mortgage brokers immediate, 24-hour access to current data on their loans in progress with Countrywide. Loan information is automatically updated three times daily. In addition, mortgage brokers can lock-in loans electronically at their convenience, as a quicker alternative to contacting DirectLine Service agents in Countrywide's wholesale branches, via telephone or fax machine. Some specific features of DirectLine Plus include:

* Loan status information--With loans sorted by surname, address or loan number, the loan status screen provides information on the most recent date and time of loan file activity. All loan stages are accessible, including when documents were drawn, the loan closing date, anticipated funding date, quantity of loans in a broker's pipeline, current pipeline dollar amount for that broker and when a broker's check was mailed from Countrywide. Updated data files, including loan status and underwriting information, are automatically routed to the broker's system at scheduled daily intervals (9 a.m., 1 p.m. and 5 p.m., Pacific Standard Time/Pacific Daylight Time).

* Underwriting decisions/conditions--This screen highlights approved underwriting decisions in green and those denied in red. In addition, conditions needed to comply are noted, such as the appraisal, income verification or W-2 forms. Also included are the number of conditions that have been received, accepted, denied, or are unacceptable or withdrawn.

* Loan details--Important loan details are provided, including borrower name, property address, sales price, loan amount, loan number, rate, term, caps and margins (if ARM product), names of the key Countrywide contacts (i.e., underwriter and branch manager), closing agent, customer points and broker fees.

* Remote lock-in capability--This feature enables brokers to initiate a remote lock on registered loans. It requires personal input by the broker, including information such as commitment period, rate/point preference and associated broker adjustments and fees. Red flags appear if attempted lock-ins are not received or accepted by Countrywide.

* Electronic mail--This facility allows brokers to communicate with Countrywide electronically regarding specific loans or general inquiries. Messages are filed by date, topic or loan number, and brokers can create new messages or respond to incoming messages.

* Current branch pricing--Pricing information is displayed for all available Countrywide loan programs, not just those most commonly requested or published on daily rate sheets. Pricing files are automatically sent to the broker's system anytime Countrywide initiates a market adjustment (usually once or twice daily).

* Program guidelines--Guidelines are displayed for all supported loan programs, based on Countrywide matrixes.

"DirectLine Plus (DLP) is the latest example of Countrywide's commitment to sharing our cutting-edge technology with our business partners," says Joe Harvey, executive vice president of America's Wholesale Lender, Countrywide's wholesale division. "The new technology will save time, eliminate branch/broker phone tag and minimize the potential for errors. We look forward to helping brokers enhance their business and customer relations through this powerful tool." One mortgage broker using the new technology is Steve Hankla, partner at First Choice Financial in Torrance, California, and a state director of the California Association of Mortgage Brokers.

"With DirectLine Plus, it's quick and easy to track the latest status of my clients' loans," says Hankla. "By simply clicking onto a file, I get an immediate, direct response and don't waste time on the phone or have the frustration of phone tag. The technology allows me to be more efficient, and I can also respond more quickly to customers and real estate agent inquiries. Overall, DirectLine Plus probably expedites my customers' loan process by a couple of days, which is great, since time is money."

The rollout strategy

A strategy of solid training will support the complete rollout of DLP, with Countrywide-approved brokers receiving a full training package once they have the proper hardware configuration to support the new Windows-based software. The training kit includes an introductory video, a tutorial that is built into DLP for immediate on-line access and a comprehensive user's manual. Countrywide will also offer a toll-free phone number for supporting brokers utilizing the system.

Countrywide provides its 3,000-plus approved brokers with the DirectLine Plus software and Xcellenet Node (the communications uplink)--all free. Brokers can access DLP from their offices through a personal computer by linking to Countrywide's computer network.

Future trends

Although DirectLine Plus is only one example of productivity-enhancing tools being created within the mortgage industry, it is also merely a first step in what appears to be a much broader move toward full integration with the business partner.

Probably the most profound step still to come will be the movement toward access to the mortgage companies' fully integrated processing systems. Once that happens, the business partner will have the same processing power as that of the "mother" mortgage company, a situation that promises huge payoffs for all concerned.

Business partners, such as mortgage brokers or correspondents, will gain access to:

* Powerful processing systems that provide for enhanced electronic data interchange (EDI) communications to data suppliers and laser printing efficiencies;

* Advanced technologies that include "LapWare" (applications built specifically to run on laptops and portable printers) and other "GroupWare" applications (applications specifically written to allow people to share information electronically);

* Expert systems for underwriting decisions as well as applications that help manage pipelines; and

* Barcoding and imaging systems that will cut down on paper flows.

The mortgage company will realize:

* Consistent processing flows including generation of the forms package;

* Seamless integration of data from the mortgage broker or correspondent lender into the funding lender's internal systems, eliminating error-prone rekeying functions;

* Consistent underwriting decisions made by utilizing expert systems that have guidelines defined by the lender.

Obviously, this whole premise is based upon the broker wanting to do business with only one lender. For a national lender that handles a wide variety of products, it's possible that the combination of value-added services and a consistent and competitive pricing policy would sway a broker into your camp exclusively.

However, should the broker want to do business with many lenders, the degree of difficulty involved with furnishing them with value-added services and tools is much higher, but not impossible. Building the link between the originator's system and the lender's system will enable seamless and efficient data movement. Once this bridge is completed, many, but not all, of the benefits, such as automated underwriting and EDI, can still be realized. Although this is not the most desirable way to interface with your business partners, it is far better than no interface at all.

Strategy for tomorrow

From Countrywide's standpoint, the strategy is to expand the use of these tools into the company's other originating divisions. The DirectLine Plus system will be enhanced to fit our correspondent division's needs with only minor modifications. This migration should be completed before the end of this year.

We currently have a working prototype of a real estate agent system that will be ready for production within the next 12 months. The system has many features that are primarily used by agents in conjunction with their local multiple-listing services.

In addition, we have begun distribution of a prequalification and loan calculator system on a diskette in both DOS and Windows to any customer who calls in on a toll-free number. We plan on expanding this function to include a full-loan application system that can be returned on the diskette or sent into Countrywide's proprietary electronic mail box via the customer's modem.

From an overall industry perspective, three axioms must be kept in mind. These axioms are truer now than ever before in the history of our industry. They sound simple, yet failure to adhere to any one of these axioms could result in diminished future market share:

* Make it easy for the partner to do business with you;

* Make the partner want to do business with you; and

* Make it a true partnership so that everyone wins.

Well, here we are... back at the fork in the road. If Yogi were here, you can bet he would take it.

The question is, will you?

Jeff Butler is managing director-chief information officer with Countrywide Credit Industries, Inc., Pasadena. In October 1993, he will become chairman of the Mortgage Bankers Association of America Technology Committee.
COPYRIGHT 1993 Mortgage Bankers Association of America
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

Article Details
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Author:Butler, Jeff
Publication:Mortgage Banking
Article Type:Cover Story
Date:Aug 1, 1993
Previous Article:The urban housing crisis.
Next Article:Information power.

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