Lenders Seek Quality, Efficiency through Outsourcing

Submitted by Ronald Tennant with Metrocities Mortgage:

MBA (5/23/2008 ) Palaparty, Vijay
Lenders continue to outsource business processes to vendors in search of quality and efficiency. Technology companies such as Guardian Mortgage Documents Inc., Denver, see an opportunity in the market to help lenders improve processes and ultimately increase profit margins.
“The mix of business has really changed though the industry is flat,” said Tim Anschutz, vice president of marketing and channel sales at GMD. “Companies however are working more with vendors and outsourcing for a mix of services and even consulting. They are especially pushing for integrating efficiencies in order to focus on leveraging return on investment. They are focused on increasing profit margins and they can achieve that with more effective interfaces with their partners.”

Anschutz said vendors also establish partnerships with other vendors to round out their offerings. GMD, a document preparation provider with outsourced products and services, interfaces with Mavent Inc., Irvine, Calif., for compliance and quality assurance review.

“All the data runs through Mavent and if there is any question on any aspect of the loan data, it puts a hard stop because of quality assurance rules,” Anschutz said. “Drawing the hard line refines the process and allows lenders to go higher up the value chain by identifying potential problems early on.”

Guardian Mortgage Services, a division of GMD, offers closing and post-closing services as well. Anschutz said outsourcing of back-office operations is most beneficial to lenders because maintaining in house processing when volumes are low results in wastage. “It comes at 100 percent variable cost and reduces burden for lenders,” he said. “Evaluate the right-sizing aspect of it—it makse sense.”

GMD maintains all of its outsourcing operations onshore in the U.S. Anschutz said that document preparation and related due diligence require having the entire operation onshore. “What we do is involves real-time and logistically it requires an onshore presence,” he said. “We even list that as an advantage and find our clients look for it."

Increasingly, lenders looking for an entirely onshore presence be because of security concerns, efficiency and functionality, Anschutz said. He said that offshore operations are better suited for software development and related activities that require a larger span of time and usually don’t have immediate implications and requirements.

Core Mortgage Group LLC, Scottsdale, Ariz., recently selected GMS to provide outsource fulfillment services for back office operations. “With the state of the mortgage industry, we wanted to minimize our amount of risk while keeping costs down,” said Matt Trainor, secondary marketing director at Core Mortgage Group. "We decided to develop relationships with companies in helping us meet our long-term strategic objectives. We structure business around solid relationships with vendors.”

“Quality is achieving consistency in process,” Anschutz said. “It’s a balance of efficiency in processes and is often situational. Quality doesn’t necessarily drive efficiency but achieving higher return on investment requires both.”

GMD reported most activity in loan modifications. “Loan modifications have been an increasing trend, increasing well over 100 percent,” Anschutz said. "It’s a healthy sign that fits with industry efforts to stabilize homeownership.”