RealEC Documents Cost Savings
Chalking up a reported 290% increase in volume in less than six months, the RealEC Exchange processed a million orders between November 2002 and January 2003.
According to the announcement, the RealEC Exchange e-commerce platform now averages 380,000 real estate orders per month, resulting in more than 1.5 million related vendor transactions each month.
By way of contrast, back in October 2002 RealEC announced that it tallied 1.2 million real estate orders for the entire first nine months of that year, an average of some 133,000 orders per month.
Additionally, said RealEC president Jeff Sanderson, February 2003 marks the eighth straight month in which the company's revenue exceeded expenses. "RealEC continues to be profitable," he said. "This has allowed us to invest additional money into our core exchange while, at the same time, expanding our technology toolbox, which enables mortgage lenders to be more cost effective."
Among the products in that toolbox is RealEC's iSelect, used to automate selection of settlement products and prices. "What we are doing with iSelect," said Mr. Sanderson, "is automating the decision process by taking the lender's business rules, including rules provided by the GSEs, and capturing those in a data format with an XML-based rules set to automate product selection."
He said iSelect also "data-izes" the service level agreement (SLA) between the lender and the provider to make sure the order is placed with the appropriate provider. "For example," he explained, "if a lender has an SLA dictating that I will send you 25% of my orders in California, iSelect will verify that they are in fact sending that specified 25%."
A major part of RealEC's value proposition is that it helps lenders reduce costs, he said. He noted that a recent third- party report done for RealEC showed that "just in labor savings on the settlement side, the ability to have an electronic platform directly to settle services saves on average $86 per closing, and an average $198 per transaction for settlement services as a whole."
He said the savings are realized through the platform's full integration with title, closing and other product systems, eliminating the need to re-key information, removing courier deliveries, faxes and phone calls - "all because of the interface to deliver the product back to the originator electronically."
While RealEC has not quantified the corresponding saving on the origination side, he said the company is developing an ROI calculator lenders can use to improve their tracking of the cost savings they achieve through technology.
"Right now we are integrating right with the lenders' LOS systems, giving them the potential not to re-key." He said lenders spend "a lot of people time" deciding which settlement services I need to order based on loan amount, LTV, geographic area, property type, all the factors determining whether I need a full appraisal, broker price opinion, drive- by or AVM. These are the kinds of decisions lenders make today on a semi-manual basis."
Because lenders can realize cost savings through bundling of settlement services, RealEC also is positioning itself to be ready for one-fee lending in keeping with likely RESPA changes. "We will aid in guaranteed mortgage bundling," he emphasized, "though we won't be bundling ourselves." Service providers that offer multiple products and services - such as RealEC's parent company FNIS - "are going to be in a better position to take cost out by bundling," he noted.
RealEC is a past recipient of Mortgage Technology magazine's Synergy Award for advancing the cause of end-to- end electronic transactions. Today the company boasts more than 3,500 active service providers in its nationwide network. The RealEC Exchange is used in some capacity by all five of the top settlement providers and 12 of the top 15 mortgage originators.
Santa Ana, Calif.-based RealEC Technologies (www.realec.com) founded in 1998, offers itself as an intelligent, electronic exchange for mortgage loan originators, Realtors and settlement service providers. The company is a majority-owned subsidiary of Fidelity National Information Solutions (www.fnis.com) with significant equity ownership by Stewart Title Co. and LandAmerica Financial Group.
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