BANKING SERVICES MORTGAGE

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1 SERVICES End-to-end management of loan origination,underwriting and closing for a US-based Mortgage Loan Company Client Profile Performance Highlights: Reduced overall cost of loan origination by 25% Reduced loan turn-around time by 24% Reduced reworked loans from 2.04% to 0.09% Increased efficiency by 33% Improved accuracy rate to 95+% Among its equivalent competition, the Client ranks second in overall satisfaction (Source: J D Power) Among its equivalent competition, The Client ranks Better than Most in Customer Contact (Source: J D Power) The Client is a US-based Mortgage Loan Company, providing mortgage origination, processing, closing and servicing for residential loan products. Business Scenario The mortgage market has always been cyclic and volatile, and the Client has faced a difficult landscape in which to grow and succeed. Regardless of what direction the economy and mortgage rates appear to move, mortgage origination volumes remain at their lowest point since Slow economic growth, combined with sustained, higher unemployment levels will continue to limit refinance and sales volumes throughout the next 2 years. While revenues for the industry as a whole have been declining, the Client has faced a smaller proportional decline due to more limited competition. In the global market, some temporary stabilization occurred, largely driven by events in the US, where government initiatives to prop-up the housing market have played a major role in spurring home purchase activities. However most loans positively impacted by these efforts have been processed and are no longer in the refinancing or home purchasing market. Overall investment in housing and commercial facilities sector is weak due to perceived risks, notably from the situation in global financial markets, particularly the European debt crisis. 1

2 Competition The Client s competition includes Citi Mortgage, Ally Bank, Bank of America Corporation, DHI Mortgage Company and Wells Fargo Home Mortgage, Inc. The Client maintains a 1.2% market share in residential lending and a 3.3% share in residential servicing. Market Share - Residential Lenders Market Share - Residential Services Challenges Faced: Cost of operation Quality & Speed of Processing Low operational efficiency Customer Churn Bank of America 14.9% Wells Fargo & Company 26.2% Wells Fargo & Company 13.0% Bank of America 20.4% Chase 9.0% Chase 10.8% CitiMortgage, Inc. 4.3% Ally Bank/Res cap (GMAC) 4.6% Ally Bank/ResCap (GMAC) 2.8% Citi Mortgage Inc 4.5% U.S. Bank Home Mortgage 1.6% U.S. Bank Home Mortgage 3.7% CLIENT 1.2% CLIENT 3.3% SunTrust Bank 1.2% Sun Trust Bank 2.0% PNC Mortgage 1.0% Quicken Loans Inc 1.9% MetLife Bank N.A. 0.8% Provident Funding Associates 1.8% Regulatory Environment HUD, FHA, the S.A.F.E. Act and other industry regulations have required significant adjustments to mortgage and lending practices. The Client and the mortgage industry in general experience increased regulation and scrutiny by various federal and state agencies, and managing increased costs of regulatory compliance. 2

3 Business/Operational Challenges Definition of Challenges Mortgage rates were frequently dropping as a result of Federal rate reductions, making it difficult for the Client to predict refinance activity. Managing regulatory compliance combined with managing the ebb and flow of loan volumes created a challenging situation. Furthermore, the Client s mortgage process was also in need of optimization: Each component of loan processing was operating as a stand-alone process. This led to difficult transitions between components, as well as redundant activities. Multiple personnel were performing the same processes, resulting in an increased cycle time per loan. Increased cycle times were impacting the total number of loans the Client was able to service or close. Difficulties occurred ramping due to the mortgage industry s unexpected volume fluctuations. Lower CSAT scores were reported during peak periods, and caused customer churn. Lower throughput was directly impacting revenue. Partner Selection Criteria Based on these challenges, the Client needed an unconventional partner. While traditional back office vendors could deploy the technology platform and resources needed to perform mortgage processing, they lacked the customer management capabilities and experience needed to mitigate customer churn, and address volume fluctuations. A partner for this engagement needed to demonstrate the following: Ramping ability for expected and unexpected volume fluctuations CSAT management and customer experience Customized solution with technology integration into PHH s multiple processes Process re-engineering integrated into solution Established global presence for a geographically optimized solution Organizational stability 3

4 (Partner Selection Criteria continued) Sutherland was able to demonstrate exceptional depth and achievement in customer management across a broad range of services and verticals, including Technology, Retail, Banking and Financial Services. Most importantly, Sutherland demonstrated what it has done for all clients an uncommon willingness to bring the specific solution they needed, rather than one which was off the shelf. After an assessment, the Client was confident with Sutherland s ability to deliver, even without specific domain expertise in Mortgage processing. Sutherland Solution The engagement involves the following discrete processes: Document Review Center Sutherland handles a complete loan file on the back-end, from the time the customer sends in a signed application package till the mortgage is approved for credit and is ready to be sent to closing. Sutherland consultants contact third parties such as employers, banks or insurance companies to obtain various documents like verifications, asset/payoff statements or hazard/title insurance policies that are critical to the loan. Review all credit, income, asset and property related documentation obtained from third parties or from the customer in order to clear conditions required for the loan approval process. Pricing (Secondary Marketing) Manage requests from Client Loan Processors to edit/alter information in the loan origination system relating to the interest rates and discount points based on certain business decisions or special conditions being offered to the customer. Appraisal Services and Project Underwriting Follow-up with property appraisers on appraisals that are due in order to complete the transaction. Contact Home Owners Associations to validate that a project designated to be a condominium meets the guidelines for loan approval. Wholesale and Correspondent Lending Review of Truth in Lending documents and preparation of loan documents for closing 4

5 (Sutherland Solution continued) Loan Servicing Multi-channel customer and technical support for customers requiring access to their existing loans through the Client s website. Technology Reporting High-end software development services for the Client s operational reporting needs using the Hyperion suite of products. Knowledge Capture & Transition Process Sutherland deployed Six Sigma resources and domain experts to design the updated version of each internal client process. The end result was a hybrid model which combined Sutherland s service excellent and process optimization expertise with the Client s established mortgage processing methodology and procedures. Hiring & Training Process The Client had very specific hiring requirements for the on-shore team which included years of experience and education levels. The deployed service delivery leadership team consisted of individuals with an average of 17 years experience in the mortgage industry and was therefore readily able identify, recruit and train appropriately profiled team managers and consultants. Technology Enablement Sutherland s Global Software Infrastructure (GSI) team developed advanced middleware applications for this engagement. These applications were pivotal to the overall success, since they allowed the Client to continue using their platforms but enabled Sutherland to use its proprietary tools and methodologies. 5

6 Results/Benefits Delivered Reduced overall cost of loan origination by 25% Reduced loan turn-around time by 24% Reduced reworked loans from 2.04% to 0.09% Increased efficiency by 33% Improved accuracy rate to 95+% Reduced cost of recruitment and training Full Business Continuity through a geographically distributed service delivery model Exceeded information security requirements in a highly regulated business environment Increased revenue opportunities through scalable operations enabling the Client to meet not only seasonal peaks, but volume spikes caused by market related factors like re-finance rallies or incentives. Among its equivalent competition, the Client ranks second in overall satisfaction Customer Satisfaction Score Chase 760 CLIENT 747 Wells Fargo & Company 741 GMAC Mortgage 729 CitiMortgage, Inc. 725 Bank of America 710 J.D. Power and Associates 2011 U.S. Primary Mortgage Origination Satisfaction Study 6

7 SERVICES Business Transformation Services Knowledge Services Business Process Outsourcing Technology Enabled Services Bulgaria Canada Colombia Egypt India Mexico Philippines United Arab Emirates United Kingdom United States For more Information: To learn more about Sutherland Global Services, please contact us: Toll-Free: x Website: About Sutherland Global Services Established in 1986, Sutherland Global Services is a global BPO services enterprise providing integrated Platform-based and Analytics enabled business-cycle support solutions for major Industry Verticals and global industry leaders. Sutherland collaborates with clients to help them excel in their industry while maximizing their customers lifetime value. Sutherland is Certified as a Minority Business Enterprise by NMSDC Sutherland Global Services CS-BANKINGSVSMORT