Lenders Keen on Bundling
The industry is calling for the automation of settlement services to further streamline the mortgage process. In terms of dollars and cents, 61% of respondents to this publication's affiliate, the Electronic Mortgage Technology Newsletter, believe that this approach will save between 26 and 50 basis points per loan.
To sweeten the pot further, technology vendors like Dexma here, Fiserv, Brookfield, Wisc., and ATM Corp. of America, Pittsburgh, are fully integrating a bundled services platform into their offering that will seamlessly transmit the necessary data out of the user's LOS to the third-party service and back to the LOS once that service is completed.
For Bethpage Credit Union, Bethpage, N.Y., the ROI of bundling is already being realized. "Bundling means lower cost per transaction and greater efficiency in the ordering process," said Gregory Wirth, assistant vice president of lending for BCU. "With the bundle of services I believe we get a better price from the vendor because we have the weight of the technology provider behind us.
"It also saves us from having to go out of our LOS and to their site or to have to order over the phone," he said. "It's only one click."
"Utilizing bundled services allows lenders to offer streamlined loan programs (e.g. one fee options) while better understanding and controlling costs," added John Barnes, chief operating officer at Prime Alliance Solutions, Tukwila, Wash.
"There are two main benefits of bundled services," explained Joe Brancucci chief lending officer at Boeing Employees' Credit Union, Tukwila. "First, it's less confusing for members/borrowers. Plus, it's easier and more efficient for lenders to account for one fee than having to track and reconcile multiple fees."
In terms of the types of bundles most sought after, Mr. Wirth noted that BCU wants to bundle "everything we can. We view this as something that's cheaper, quicker, more efficient, it's the way we want to go."
"We believe lenders want service bundles that are integrated with their origination and processing systems, require minimal data entry and deliver data as well as documents," added Mr. Barnes. "Lenders seeking to streamline the origination process will rely on integration and data to drive automated workflow and decision-making processes."
"The market is looking for efficiency," noted Kenneth Bloss, senior vice president of sales and marketing, Fiserv Lending Solutions. "The market is also looking for a way to bring in products automatically without having to piece them together. Bundled services is a trend of the future. We've already begun to see it."
In terms of realized efficiency, E*Trade is already reaping the reward of bundled services using ATM Corp.'s solution. "Currently we utilize the VISION Systems to operate E*Trade Settlement Services," said Tina Martineau, corporate communications manager at E*Trade Financial. "The flexibility and functionality of the system allows us to make modifications to the system, even on the user level, giving us the ability to customize the system to meet our specific business needs. In addition, there are robust management controls that allow us to control the prioritization of vendors in real time based on quality and performance, thus enhancing the customer experience and giving us better control of the process.
"Prior to ATM, E*Trade Mortgage had established relationships with a number of third-party vendors," said Ms. Martineau. "We also had an internal escrow and appraisal department, and it made sense to consolidate all of those services into one line of business. E*Trade Mortgage has been one of the leaders in the mortgage industry for its guaranteed Total Value Pricing. Total Value Pricing allows E*Trade Mortgage to provide the customer with an upfront price promise - the customer knows the cost of obtaining a mortgage with E*Trade upfront - delivering complete transparency to the customer. When we added the settlement services division, it allowed us to control the vendor costs and pass the inherent savings on to our customers."
And most agree bundling is the wave of the future with or without RESPA reform. "The processing of a mortgage has become a commodity, especially when you're talking about a non-specialty product," said Mr. Wirth. "The company that can deliver the quickest with the best price is going to win."
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