Full-Service Mortgage Banker Builds Consistent Underwriting Protocols with DataTrac Driven Back-End and DataTrac EDM Paperless Lending
Company
Licensed to lend in 20 states, United Fidelity Funding (UFF) is a two-year-old mortgage bank based in Kansas City, Mo that funded $420 million in 2009 (about $35 million per month). The firm prides itself on its ability to compete head-to-head with more established firms through its investments in loan processing automation, which allow it to operate effectively both as a wholesale and retail mortgage banker.
Challenge
UFF opened its doors as a wholesale mortgage banker in early 2008 with plans to add retail operations as quickly as possible. However, with only one warehouse line, two investor relationships and $750,000 in net worth, the company faced the formidable task of establishing a successful mortgage lending footprint during a period of economic instability, lagging demand and regulatory uncertainty.
UFF set out to create a loan processing technology infrastructure that would allow the firm to remain nimble in responding to market opportunities while fostering growth based on consistently applied quality lending processes. Recognizing that a paperless process would entail considerably less risk and create greater efficiency for managing its branch operations, UFF made it a priority to identify an electronic document management platform (EDM) that would support the entire operation, both wholesale and retail, from application through loan delivery. In addition to supporting its back end requirements, UFF needed an EDM that would integrate both with its vendor-supplied and proprietary systems.
Solution
UFF Chief Operating Officer Kevin Marconi spearheaded its extensive technology research and evaluation effort, selecting DMD’s DataTrac automated workflow and data management platform as its back-end system integrated with Loan-Score on the front end, and DataTrac EDM (formerly known as DocumentTrac) as its electronic document management system.
Results
UFF realized immediate savings as a result of becoming paperless. Previously accustomed to having shipping costs of about $10,000 each month, once UFF began delivering its files via imaged bundles, its shipping and postage charges were virtually eliminated. Additionally, the time to stack a file and make copies, change paper trays and toner bottles has been totally eliminated.
UFF’s monthly paper cost and copier expense has been reduced to the bare minimum, from about $2,000 to less than $275. Further, as a “paper shop” it was difficult for one UFF shipper to send 100 files in a month. Now, one UFF shipper can deliver 500 paperless files – without logging a single minute of over time.
According to Marconi, UFF built its lending platform to allow its brokers, branches and loan officers to enter loans on the same front-end system, which integrates with its electronic document management tool, DataTrac EDM, and with DataTrac, its central database and system of record.
UFF underwriters now work with loan files on their monitors instead of on paper. Via a seamless integrations, loan data (including conditions) flow between Loan-Score and DataTrac, with access to the file in DataTrac EDM every step of the way.
According to Marconi, by leveraging DataTrac UFF has eliminated most opportunities for human error, compressed time for underwriting and created a system of 100% accountability.
According to Marconi, the time savings created by its DataTrac platform can only be measured by analyzing the total amount of time spent on any single file by all departments since the efficiencies result from eliminating typical delays.
“By having our front-end automated underwriting system populate all possible conditions into DataTrac, our underwriters end up thoroughly reviewing each file before approving it,” explains Marconi, “which results in fewer shipping errors, fewer doc drawing errors, less time spent in the QC department, government loans being endorsed quicker with fewer problems, loans being shipped to the investors faster, and loans being purchased off of the warehouse line faster.”
“We now measure our execution in hours instead of days,” Marconi explains. “Once a paperless loan is shipped to the investor it is purchased on average in 5.23 days. That’s nearly 30% faster than our investor’s channel average for file delivery - versus ready to fund – of 7.25 days. From loan closing to loan purchased, we average 11.82 days, including the three-day right to rescission, weekends and holidays – almost 50% faster than our investor’s channel average of 21.35 days for close – again, versus ready to fund.
“These significant accelerations in our loan processing and loan purchase turn times have a big impact on UFF’s funding capacity and bottom line, and contributes to excellent partner relationships with our investors, as well as with our warehouse line providers,” Marconi added.
For UFF, DataTrac’s post closing efficiencies are another huge benefit that saves significant time in QC, faster endorsing on government loans, and the elimination of unsellable loan scenarios.
Further, the system applies a consistent level of approval to UFF originators on every file regardless of the individual underwriter – preventing a tendency for personal relationships and assumptions to inject subjectivity to a process that must be purely objective.
“With its system anchored by DataTrac, UFF provides more consistency in underwriting output as perceived by our TPO customers and loan officers,” Marconi explained. “This is really important to our risk mitigation because it forces each of our underwriters to make decisions following our corporate guidelines.”
“We’ve seen our customer experience and loan quality go through the roof as a result of putting this system in place,” he said. “Of course, DataTrac enforces sophisticated business rules to make sure that the loan can’t proceed without the completion of the appropriate supporting processes. This has been critical in making everything go smoothly. “
Not only does DataTrac enable UFF to realize the benefits of its preferred underwriting methodology, but the mortgage banker also leverages DataTrac’s secondary capabilities for centralizing their lock desk and controlling their hedging strategies.
“When working with our hedge advisory company we rely on DataTrac’s open trades pipeline report as the master list because our data is just exceptionally accurate,” said Marconi. “Being able to provide our hedge company with accurate, nearly real-time, totally accurate pipelines mitigates our risk and makes us more money.”
DataTrac’s solutions empower United Fidelity Funding to apply quality underwriting processes consistently across both its wholesale and retail channels. The results are that not only has UFF survived through a tough market, but they have actually grown when other less agile mortgage bankers have succumbed to liquidity shortfalls, lack of investor confidence in the TPO channel or been unable to sustain profitable volumes.
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