Proctor Financial Says Expectations Are Rising Fast

Proctor Financial Inc., a division of the Brown & Brown national insurance agency that provides lender-placed hazard insurance coverage, says the industry landscape is changing as lenders look for ways to manage costs while emphasizing compliance.

Those trends have created new opportunities while also posing challenges for firms that provide outsourcing to the mortgage industry.

Mortgage industry vendors are putting an increasing emphasis on efficiency and reliability. Proctor Financial, for instance, has implemented workflow and imaging technology that dramatically reduces the paperwork involved in insurance processing.

"It actually improves the process and the flow so that there is no paper getting lost, and there is no storage of paper," said Karen Schickel, a senior vice president at Proctor.

That kind of imaging and workflow is particularly useful in the insurance industry, a very paper-intensive business.

Val Dickerson, vice president of outsourcing at Proctor, said the company's workflow system, which allows users to see a split screen with an image of an original document alongside the servicing system, has created better organized workflow. Users then can populate the servicing system with data gleaned from the document image.

"You have no one walking around with paper. You have no one wondering where the mail is."

Proctor itself outsources the imaging of original documents to a specialist, hiring a firm located just a few miles from Proctor's own office. Mail is sent there, documents are imaged, and the entire workflow used by Proctor's own employees relies upon the use of images.

In addition to enhancing workflow, the images assist in the creation of reports and quality control by making it easier to conduct random checks. Managers can see screen reports and compare with the original documents without leaving their desks.

Clients also can gain online access to the process, allowing them to see where Proctor is at any given time with their own loans.

Proctor executives say that use of electronic data interchange with the insurance companies has been of limited usefulness so far, because the insurance companies still insist on sending paper cancellations and renewals. As a result, Proctor has approached EDI cautiously.

Currently, optical character recognition technology may soon change that by making it easier to integrate EDI with Proctor's imaging and workflow system. OCR would eliminate the problems associated with template driven-EDI, because the documents could be scanned for key words and phrases, helping to populate data directly into workflow. OCR could make EDI much more intelligent and make it easier to digitally scrape data off of documents and load into the servicing system automatically.

Ms. Schickel says that mortgage servicers have higher expectations of an outsourcer than for their own shop, because an outsourcer is supposed to be an expert and have the technology best suited to improve productivity.

In addition, servicers find they have a new incentive to turn to an outsource specialist. In many cases, the rating agencies that have started providing loan servicer ratings to the industry often encourage the use of expert vendors.

That is just part of an industrywide trend toward more emphasis on compliance, Ms. Schickel said. Historically, lenders pretty much just needed to focus on Fannie Mae and Freddie Mac requirements. Now, they have rating agencies, a host of new lending laws (including the prominent Sarbanes-Oxley Act), the Office of the Comptroller of the Currency and others checking to make sure that loan servicing practices are fair to consumers.

A few years ago, several big subprime mortgage lenders came under fire for allegedly heavy-handed collections and customer service tactics, including the force-placement of insurance. That, Ms. Schickel said, served to wake up the industry to the risks associated with noncompliance.

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