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CB&T Automates to Expand Beyond Loan Servicing

In moving from a servicing outfit to an origination and servicing shop, Commonwealth Bank & Trust Co. here realized that it had to turn to technology to assist this transition.

The company's first effort was to automate pricing, given that this was unfamiliar to a company that focused heavily on servicing loans and not originating. In investing in Optimal Blue's pricing technology, the bank has seen improvements in accuracy and has significantly increased yields and commissions on loans.

Prior to Optimal Blue, Commonwealth was using a proprietary price modeling system generated by the bank's internal IT staff. This model was efficient when dealing with conforming products, but with the introduction of newer and more complex products, the system did not allow Commonwealth to operate at peak efficiency.

The bank's staff had to load pricing into the system every day as well as pay for an outside firm to host the technology. In an effort to streamline the process, management wanted to upgrade the system and began looking at product eligibility and pricing engine vendors.

"My predecessor was focused on servicing loans," pointed out Bart Doerhoefer, SVP and mortgage division manager of Commonwealth. "We made some changes there. We've also replaced an in-house LOS with an external LOS while still hustling for the business. We had a pricing tool developed internally. It was great at the time, but it had outlived its usefulness.

"We're pricing loans more competitively. We looked at five or six other vendors. In doing interviews with other lenders it was an easy decision. We were using a price model technology prior so the transition was easy. Those companies used to rate sheets might think it was more difficult.

"The training was very easy as well," continued Mr. Doerhoefer. "We spent two days in Texas and configured all our investors. We came back and rolled it out the next week." "The features were similar across all the vendors we looked at. We viewed the different systems and unanimously decided to go with Optimal Blue. The way that it's displayed was easier when looking at other vendors. It was easier to do a search."

Equally important to Commonwealth was the ability to directly access a lender's website to see the specific guidelines for particular products.

With investor guidelines changing at a rapid pace, it was important for the bank to know the information reflected in Optimal Blue's system was precise.

So far, the bank has seen improvements in accuracy, particularly with adjustments, which are reflected in the pricing. The bank has also been able to increase yields significantly, as the technology allows the bank to quote rates that increase both yields and commissions.

"The product and the support are important," said Larry Huff co-CEO of Optimal Blue. "Keeping the customer happy is the most important thing. We encourage our customers, for no cost, to come to our office to test it for two days. I think that's a unique proposition. They know what they want and they know how to get value. They understand the value of technology."

"The one thing on the horizon for us is an online application system," added Mr. Doerhoefer. "We haven't decided if we'll purchase one yet though. Loan officers like to have their personal website that they can direct clients to so they can apply online and directly move that data into our LOS.

"With the constant changes in the industry with relation to what investors are doing, this has been a big help." (c) 2008 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com/ http://www.sourcemedia.com/

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