WaMu Aims for the 'Z-State' in Building National Default Business

A few years ago, Washington Mutual started work on a vision and business model that included a five-year plan to be able to service one million loans.

But an aggressive acquisition effort has accelerated WaMu's growth plans. Now, long before the five-year deadline has passed, WaMu is servicing 6.5 million loans.

During the MBA's National Mortgage Servicing conference here recently, Dave Gibson, a first vice president at WaMu, said that the company's effort to enhance its vision is still on track.

The company has come to describe this effort as the "Z-state," referring to what comes after the last letter in the alphabet.

In his area of the business, Mr. Gibson said WaMu has decided to approach servicing defaulted loans as a national line of business that will be handled with a proactive, risk-based approach.

"Part of what we are working on right now is a standardized, consistent approach at all of our sites," he said.

That means bringing together the right people, processes and technology to achieve the company's goals in default servicing.

A primary goal is to resolve 95% of people's calls at the point of entry.

"We want a single point of issue resolution," he said.

By blending inbound and outbound call systems, WaMu believes it can improve productivity. Eighty percent of representatives can do both in the company's default call center.

In addition, WaMu employs "risk-based call routing," employing scoring models provided by the government- sponsored enterprises to determine which delinquent loans have the highest risk of default and loss.

WaMu also takes the capabilities of its customer service representatives into account, using skill-based routing to make sure the right people handle the calls they are best suited to manage.

WaMu has reduced its ratio of staff to management to 10 to one, ensuring that managers have tight control of their groups and that representatives have easy access to a manager so that issues can be resolved quickly.

And Mr. Gibson said that WaMu has made a "huge investment" in training to make quick resolution of default servicing issues possible. And it has created incentives for servicing managers and representatives to help WaMu achieve its goals.

"A portion of everyone's compensation will be performance based," he said.

Copyright 2003 Thomson Media Inc. All Rights Reserved.

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