In 2005 the housing market was hot. Mortgage lenders were almost getting more mortgage applications than they could handle. But in Miami they were not getting motivated, dependable, high-quality staff to process mortgage applications and the attendant materials that accompanies them. According to Hector Chomat, President, County Trust Mortgage Bankers in Miami, “You’d run an ad and get two or three applicants, and they spoke broken English, had a high school degree at best and a poor understanding of the housing market.”
Most of the tasks they were expected to perform had to do with rekeying data from one company system into another, a fairly redundant and boring task, so turnover was a problem too. That led to management headaches involved with constantly running ads and hiring and training new people as well as filling in for people who called in sick too often. Despite the fact that Chomat was paying $30,000 a year plus benefits for these positions, he couldn’t retain people, and the quality of work they were doing was shoddy.
In addition to turnover, too much of the rekeying and allocation was inaccurate.
Underachieving Staff and Legacy Infrastructure Create Problems
County Trust is a mortgage lender whose main business is funding mortgage loans for about 200 banks. They also do refinancing of mortgage rates for home loans as well as provide home equity loans and second mortgages.
The banks fax loan applications and related materials like W2s, pay stubs, and tax returns providing data on an applicant’s employer, salary, credit history, assets, and liabilities. County Trust receives the materials as images or PDFs at a central fax server. About 90 pages of materials accompany each loan and about four pages with 50 fields need to be rekeyed into the loan processing system called Genesis 2000. The system imports other materials automatically.
Chomat says all this data is then imported into a loan-tracking application called DataTrack that determines the loan program to be used, the interest rate the applicant locks into for the loan, the rate at which the company can sell the loan on the secondary market, the conditions for approving the loan, the conditions signed off on thus far, and so on. Various conditions could be employment verification; such documents have to be produced for the closing package, There’s also the schedule for the first mortgage payment.
Genesis 2000 stores the materials needed to process the loan while DataTrack determines and stores the results of the activities performed during the loan application process.
A third system, DocumentTrack, is the system that stores different classes of imaged documents that are related to the loan. Chomat says this is where file allocation occurs-basically forms are categorized and stored with like forms. Pay stubs are categorized with pay stubs, W2s with W2s, color pictures of homes and appraisals with appraisals, etc. This way, loan officers can easily find the type of information they’re looking for to approve the loan. Without DocumentTrack, loan processors’ jobs would be enormously more complicated because they are dealing with upwards of hundreds of loans at the same time.
In 2005 Country Trust processors had to rekey data from Genesis 2000 to DataTrack and then categorize different documents in the Document Track system. They prepped the components of the loan so loan officers could process them.
Scoring Big with Indian Offshoring
To simplify and expedite the process and eliminate mistakes, County Trust outsourced rekeying, allocation, and integration of some of the systems to Inuva, a specialist in offshore mortgage loan processing.
Country Trust still receives application information at the fax server, but all rekeying is done in India during the same business hours as County Trust operates in Miami. That means Inuva works at night while County Trust carries on business during conventional East Coast business hours. Chomat says, “Because they work the same hours, it’s like having staff down the hallway.” SabioIT, a third-party developer, installed Citrix Meta Frame Presentation Server, to enable Inuva personnel to access the three Country Trust applications remotely and manage the remote application.
Inuva also built a Web service that links Genesis 2000 to DataTrack so credit reports are automatically transferred from the first to the second system.
They also allocate all images into the correct categories in Document Track and send a notification to County Trust indicating which files have been categorized and are ready for the underwriters.
Finally, they produce a daily rate sheet for mortgages that tells County Trust the current interest rates from different loan programs, and County Trust e-mails them to different customer banks so they can offer the best rates for their loan customers.
A House Full of Benefits
Inuva’s core value proposition for Chomat is less expensive and more competent staff for less than two-thirds the cost of the salaries and benefits of the previous Miami rekeying staff. What’s more Chomat pays no benefits to the India staff-Inuva takes care of that.
Furthermore, the turnover problem has been solved. Chomat says employees are more dependable “because Inuva has a much larger pool of employees; so when we have spikes, they can allocate another individual without any additional cost.” In India, “When Inuva puts an ad in the paper, they get 100-200 resumes, and most of the applicants have a college degree,” he notes.
It also has eliminated management headaches associated with staff turnover-County Trust does not have to run ads or find employees and train them in a hurry to stay up with the workload.
Inuva also picks up the tab for all infrastructure required for remote work-anaging the Citrix application for remote work and providing phone lines, PCs, and other broadband infrastructure needed to transmit dense images.
County Trust also saves on office space for rekeying personnel-at $30/square foot. Chomat says that adds up.
The bottom line is that by eliminating all Miami rekeying staff, Chomat estimates County Trust cut its overall expenses by 50-75 percent. In addition, the company has cut time to process an application by about 75 percent–from three days to six hours. The result, says Chomat, is a much more efficient in-house mortgage loan process which results in more business for County Trust and vastly improved customer service because banks get loans processed faster and their customers get into their new homes quicker.
Lessons From The Outsourcing Journal:
- Using an offshore provider for loan processing saves the lender money on staff and eliminates management headaches like running ads for new hires and training them; the savings is due, in part, to a much larger labor pool abroad.
- In areas like Miami, data entry staff are in short supply, rarely have college degrees, and often speak broken English. Using Indian staff who are largely college educated and understand English solves the problem.
- Because offshore staff are more competent, loans get processed faster, which means the lender can do more business and achieve much better customer service.