Fifth ThirdTo Looks The Future
hink the e-mortgage is too daunting to undertake?Who has the time? Who has the money? Who has the re sources? Lenders with this mindset arenâ€™t alone, but they are being proven wrong every day. For one, Brenda Clem, the manager of secondary marketing loan delivery for Fifth Third Bank, Cincinnati, has been on a mission to make e-mortgages a reality at Fifth Third, as well. The in stitution hopes to begin selling e-mortgages to the GSEs by the end of this year. Brenda Clem at Ms. Clem talked to our editor Tony Garritano Fifth Third about her journey, her sees a very near successes, her future future when roadmap and why others e-mortgages are should follow. mainstream.
Photography by Chris Cone
Q MORTGAGE TECHNOLOGY: Where is Fifth Third in terms of its e-mortgage adoption? BRENDA CLEM: We are going to roll out our participation in MERS in June. And as a servicer, we also function as a custodian. That’s just a little different than how everyone else operates. Part of the platform piece, which we have been meeting on, is to discuss the foundation for the e-vaulting, since we function as our own custodian in order to roll out and offer an e-lending platform. Fiserv is our vendor partner. They have been supporting the roll out. We’re probably about 85% ready to go today. We hope to have this finished by the end of ‘09. We’re a seller-servicer with Fannie, Freddie and Ginnie Mae. They have to come in and review the evaulting/custodian piece and bless that before we can roll into offering e-disclosures and actual e-closing documents, because we’re going to house those e-notes here within our environment. Those e-notes won’t go to an off-site custodian. That’s what’s a little different in Fifth Third implementing the e-mortgage technology vs. somebody else. MORTGAGE TECHNOLOGY: In terms of your “e” roadmap, are you looking at the Category One SMART Doc or PDF? How do envision the e-mortgage looking like at Fifth Third? BRENDA CLEM: We’re looking around. We’re talking to a number of doc vendors. We’re speaking to them about SMART Docs – it’s what we’re leaning toward right now. I believe the benefits of SMART Docs outweigh PDF. We have large lender status with Fannie, Freddie and Ginnie, which is something we’ve worked very hard to attain. I think there is a comfort level there with SMART Docs.
MORTGAGE TECHNOLOGY: Looking at your e-mortgage adoption thus far, what advantages would you say you’ve realized from the technology decisions you have made thus far? BRENDA CLEM: We run a wholesale side and a retail side within the Fifth Third footprint. There has been tremendous growth since November of last year with all of the refis and actual new purchase money business coming in the door. In order to keep up with extremely large pools that we are now pooling and selling to the various GSEs, this technology is going to allow us to meet the demands of those customers. We’re able to offer them mortgage products, quicker turn around times, get them to the closing table in fewer days, offer better customer service. And I believe in my conversations with Fannie and Freddie and Ginnie, because we do have this large lender status, it’s going to alleviate some of that strain we have put on them with these large pools. The natural progression is going to be the inception of the e-vaulting custodian as well as rolling in the e-closing piece to allow us greater efficiencies. My personal hope is that we have one part of this functioning by the end of 2009. At the servicing conference we talked about how you have to pick one piece of this e-process, start there, get it fully functional up and running, and operational. Now, you can show the value and the cost savings and then be able to roll in other parts of the process from there. For us, my biggest challenge is getting the custodial piece in place and then the progression from there will be to offer the edisclosures as SMART Docs. MORTGAGE TECHNOLOGY: Even though the mortgage industry is experiencing a refi surge, the market is still very challenging. What survival technology tips can you give lenders? BRENDA CLEM: I’ve spent the past year and a half doing a lot of research. I’ve had a lot of great people and other
vendors who have laid the groundwork. There’s a lot of great information out there. Lenders should partner with a Fiserv or another software vendor to implement technology into their process. Paper needs to go away just out of sheer efficiency. There are elements for human mistake when we are trying to move paper around. And hire smart people. Use the talent that’s in their head for greater efficiency, for problem solving, for really critical issues that need to be resolved, instead of pushing paper around, which is kind of that low task item. I would rather hire a processor or underwriter who is really a top notch person who can make those critical credit decisions of how do we help out the borrower, whose in a financial position that they need some help, if they are in an ARM that’s adjusting or that first time homebuyer who hasn’t been through the process before, let’s help them out. Get them in the right product. Get them in the right program instead of spending time asking where’s the loan file for whomever, because that’s inefficient. The technology is going to flush out those inefficiencies and make us more profitable. MORTGAGE TECHNOLOGY: We talked a bit about the refinance boom and the increased volume everyone is experiencing right now. How are the technology decisions that you’ve made helping you deal with that volume? BRENDA CLEM: It has allowed us to open up our broker channel. And for those brokers who are located in states where we don’t have bricks and mortar, it has helped them be able to do business with Fifth Third, because you can scan your file in to us now. I don’t have to wait for that FedEx to arrive overnight or wait for UPS. I don’t have to wait for the paper to come. You can scan that document to us. We receive it today and I can get it loaded up and get your loan registered and have a processor start working on it, which in turn allows us to shave some days off
Mortgage Technology » June 2009
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of your processing and underwriting time with us, so we can render that credit decision. We’ve gained a lot of efficiency from that. I think that is a welcome format, so we can have our sales folks go out and work with those brokers to get them to do business with Fifth Third. Here’s a quicker turn around time for you as the broker to get back with your customer. MORTGAGE TECHNOLOGY: As you’ve automated, have you looked to change the process or have you automated your existing process? And if you have changed the process, where have you made changes and why? BRENDA CLEM: We don’t have processors anymore, we have credit analysts. Fifth Third has elevated that position. We want you to really put on your underwriting hat and let’s start looking at a credit decision earlier in the process. That helps us flesh out those borrowers that were kind of in the vanilla category, and you can push those through a lot quicker. If you have a 70 LTV and here’s a W-2 employee with a 720 credit score, we can get through those in a couple of days. It has really helped us make some headway there. The other thing we’ve changed is we get all of our appraisals electronically. We’re not waiting for that anymore. I think a lot of folks are doing that, though. We also have electronic delivery of our closing docs to the closing table. Those small steps have allowed us to gain more market share. MORTGAGE TECHNOLOGY: Do you think this is the time to be altering the process? Should lenders be rethinking what they do and why they do it? BRENDA CLEM: Right now we’re all just having difficulty getting through the sheer volume. If we ever get a little slow, it’s going to be one of the things we go back and look at. Are we operating as efficiently as we possibly can? Are we delivering good customer service? Are we making sure that we’re literally only
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touching a file one time through? We’re always asking those questions.
quickly, but I don’t know if it gets done quickly anywhere. But we keep chipping away at it and tweaking it as we go. We’ve gotten a lot of support from a couple of vendor partners, as well. We’ll look to their guidance and expertise to help guide us through all this, too.
MORTGAGE TECHNOLOGY: In terms of technology decisions, how are they made at Fifth Third? How do you incorporate the business side with the technology side, upper management with the processors? How do you do vendor due diligence when you are looking for a partner? BRENDA CLEM: We always want to build better customer service. We’re always thinking: what can we do to challenge the process? That’s Spotlight on one of the core foundaBRENDA CLEM tions here. Adopting erenda Clem is the mortgages has been my manager of soapbox for the past year and a half. I have secondary marketing partnered with people loan delivery for Fifth in product and IT reThird Bank, Cincinnati. sources and found seShe is responsible for nior management who the timely delivery of saw the same vision. pooled loans to the It wasn’t just my idea. secondary market. Other folks were going Ms. Clem has 26 down this path as well. years of mortgage We’ve partnered tobanking experience, gether and found senior beginning her career management personnel in 1982 while that would champion the cause. attending the We’ve been workUniversity of ing together as a group Cincinnati. Upon and we’ve made a lot of graduation, she has great strides. Obviously, served in all there’s always room for functions of more. That’s kind of how residential production it works here. Presentafor GMAC tions have been given. Mortgage, The initial foundation North American to say here’s what we Mortgage and want to do and here’s a The Provident Bank. quick 40,000-foot view of what the cost savings would be, are all done. It doesn’t get done very
MORTGAGE TECHNOLOGY: Talk a little bit about vendor due diligence and how you pick a vendor partner to guide you through the e-mortgage process. BRENDA CLEM: We use UniFi as our LOS and our servicing platform is also Fiserv. Fiserv is our vendor who supports all of that. They have been extremely resourceful and helpful with providing information to help us down the path of offering the e-mortgage technology. They have other clients that they work with that we’ve been able to call and ask, “How does it work within your shop?” They have been a great reference with Fannie and Freddie. They have good business relationships there. That has helped push us to get in touch with the right people, getting good information and making sure we are doing it right the first time. MORTGAGE TECHNOLOGY: A lot of technologists say, “If you don’t automate now, you will be left behind
when the industry recovers.” Do you believe that, Brenda? BRENDA CLEM: I do. Nobody wants to be the last one on the boat. I don’t want to be the first, but I think right now there are enough lenders out there who have entered into the emortgage space and have done it well. Some are doing it to a much greater degree than others. I look at the success and I look at the efficiencies that are gained and the cost savings. I look at the time spent to actually leverage your staff to have the critical thinking going on instead of just the low-task item of just pushing around paper. I want the critical thinking and the decision-making folks to do what it is that I hired them to do. I don’t want to be the last one, and that’s why I’m keeping the foot on the pedal, trying to move this forward. MORTGAGE TECHNOLOGY: What is the difference between going paperless and going electronic? BRENDA CLEM: Going electronic is when I have a large-screen monitor in front of me and I can retrieve documents from any type of loan file — mortgage, consumer, whatever, any of that is available to me 24 hours a day, seven days a week. Paperless is when you still have paper that was scanned and there’s still some paper involved in the loan file. You may still have a paper custodial file, for example. You may still have a hybrid process where half of the files were scanned and imaged and I still have closing docs that are paper, for example. From a technology standpoint, my comfort level is such that I feel very comfortable with going totally electronic. I think the data integrity is there. I think the security is there. From the demonstrations that I’ve seen from various vendors with the entire encryption process, with the tamper-evidence seal, I think that allows us to guard the customer’s privacy and security while also allowing multiple levels of folks within your
Mortgage Technology » June 2009
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mortgage company access to those documents electronically. MORTGAGE TECHNOLOGY: Let’s say I’m a lender. I read this article and I meet you at a trade show. I’m looking to go paperless, and eventually electronic. What advice would you give me on going paperless and ultimately moving towards full electronic processes? BRENDA CLEM: I’d throw out some names of some really great people that I know who have really lent a hand to help me get here. The Mortgage Bankers Association has a ton of mortgage resources. The MISMO group and MERS have written a lot of white papers. There’s been a lot of groundwork done. That really peaked my interest. I would say look at your operation and consider doing an e-disclosure and see how that works within your organization. Are you comfortable? Get it down pat, no hiccups. Start small, that was the one thing I took away from all of this. Start small, find one process, get it nailed down, and show success. You’re going to get buy-in from senior management when you show success and profit. There’s always a start up cost, but once you have this foundation in place, those additional costs to roll in other processes are minimized because your foundation is already built in. MORTGAGE TECHNOLOGY: How do lenders avoid the minutia of getting stuck in a rut and viewing the project as too big to even get started on? BRENDA CLEM: It is overwhelming. My first shot out of the gate in looking at this, it appeared overwhelming, but I started looking at it, witling away at it. I thought there were some big wins that could be attained quickly that still would produce a cost savings, and still would enhance our customer service, but didn’t require an entire overhaul of the system. One of those processes, which we implemented first was going to an imaging system. Imaging those credit files as it was coming in from
the brokers or from loan officers, getting that file imaged so that you could work through those electronic docs rather than waiting for that loan file to come in, was a great start. Everybody has hiccups you have to work through. That has helped Fifth Third to gain those efficiencies without having to overhaul our entire system. MORTGAGE TECHNOLOGY: Define the next-generation mortgage lender as you see it. BRENDA CLEM: They are going to be probably under 30, and they’ll have a Blackberry or iPhone in hand. They really represent the next generation of
technology. They’ve grown up with it. They are very used to carrying around a laptop or having all kinds of electronic devices and plug-ins available. Whether you are sitting down with your customer and I pop open my laptop or whether we are talking on the phone, I’ll put together a loan application online, electronically. I’m going to e-mail that over to you. We’ll go over the encryption process for security. I see a lot of that evolving over the next couple of years where we just don’t even have paper anymore, it just goes away. And you know what, I’m really OK with that.
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