IBM Lender Business Process Services Charting a course for faster, smoother mortgage origination.

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1 IBM Lender Business Process Services Charting a course for faster, smoother mortgage origination. Streamlining and automating the lending process for competitive advantage

2 Meeting the challenges of a volatile marketplace Today s residential mortgage lenders can veer far off course when they conduct business as usual. In an industry that has long been buffeted by volatility and rocked by fluctuating business cycles, credit crises triggered by tempests in the subprime market have made an already challenging business more difficult. Disruptions in lending and borrowing have reverberated throughout financial markets. This stormy environment has ushered in unprecedented challenges for the residential mortgage industry. But the adversity that accompanies business as usual is not due only to outside forces. It s compounded by lenders internal processes by mortgage origination functions that remain stubbornly complex, fragmented and expensive. As a result, mortgage lenders must navigate an unruly sea of processes, tools and regulations that are wrought with human error, delay and sometimes even fraud. Today more than ever, it is important that lenders get on course to a secure future. To achieve this, they must make the right investments in people, process and technology.

3 IBM s vision focuses on changing the way business is done At IBM, we recognize the challenges the residential mortgage industry faces, and we are focusing our virtually unmatched services and technology capabilities on developing powerful, course-changing services for lenders. IBM, however, is more than only a technology partner. We have entered the mortgage fulfillment services marketplace with the creativity, energy and resources necessary to fundamentally change the way the industry has traditionally done business. Our vision begins with an understanding of where mortgage lenders are taking their customers home ownership. We know that on the borrowing and lending journey, mortgage customers want loans that close on time, updates at each step and no surprises at closing. We see that lenders need processes, support and technologies that deliver velocity for rapid processes, provide visibility into the various steps and address exceptions that may occur when details change along the way. To that end, IBM has made sizable investments in solutions designed to enable the most efficient and effective mortgage fulfillment process in the industry. To our existing technical expertise, industry knowledge and global delivery capabilities, we ve added the strategic assets of FileNet technology, the leading enterprise content management solution for financial services, and Palisades Technology Partners, the mortgage origination software choice of top mortgage lenders. Now the lending solution can be greater than the sum of its parts. IBM has taken the groundbreaking step in the mortgage industry of applying its broad and deep capabilities abilities unfettered by connections to any bank to creating leadership in innovative solutions. Now lenders have access to a powerful partner that can help them embrace innovative capabilities to streamline and automate the complexities that have added time, expense and frustration to every layer of the mortgage fulfillment process.

4 Providing outsourced mortgage fulfillment our menu of powerful offerings Residential mortgage lenders today need solutions that can help them weather the industry s extremes. IBM services, processes, support and technologies for mortgage loan fulfillment are designed to make possible more consistent and reliable operations than many companies have in place now. Through our wholly owned subsidiary IBM Lender Business Process Services (LBPS), we offer a menu of powerful new offerings from cutting-edge lending technology to a complete, end-to-end, privatelabel fulfillment solution designed to improve the lending process. LBPS provides outsourcing services that aggressively transfer fixed operational costs to a more variable model as they reduce the constant need to invest in new technology. Our outsourcing services span the full lending process to help mortgage lenders drive down the overall costs of loan origination. The LBPS vision includes strategic solutions for all lending models LBPS solutions are designed to make companies across the entire spectrum of the mortgage industry more competitive. We offer a comprehensive, private-label mortgage fulfillment solution for first mortgage residential conforming loans, second mortgage home equity loans and lines of credit, and sub-prime and nonconforming residential loans. And we enable loan processing from multiple lines of business, including retail, wholesale and correspondent with support for loan officers and brokers, Internet-based services and call centers. LBPS provides services that can be fully outsourced or hosted LBPS offers residential mortgage lenders an end-to-end loan fulfillment solution. Lenders turn over the process to LBPS; we manage applications on their behalf and deliver a quality loan asset ready to ship to the bank or other investor. We can deliver fulfillment services as a fully outsourced solution or via a hosted fulfillment arrangement in which the lender executes fulfillment operations using our technology platform. Whether fully outsourced or hosted, LBPS loan fulfillment solutions comprise best-in-class lending service components architected with the flexibility to allow components to be consumed individually. These components address key steps in the loan origination process, with built-in efficiencies such as paperless processing, imaging and verification services used throughout the cycle. The result is greater flexibility to focus on lenders most important challenges. LBPS solutions are designed to provide operational excellence throughout the loan origination process with the following: Vendor integration: Order/review takes place up front in the process. Virtual processing centers: Tasks can be pushed to virtually any desktop, almost anywhere. Task-driven work queues: Pooled resources enable higher productivity. Business intelligence: IBM s position at the center of the transaction enables significant analytical and business intelligence capabilities. Parallel processing: Using imaging, tasks can be worked in nontraditional order. Exception-based processing: Only problem loans are touched; turn times for nonproblem loans are not impeded. Customer care: Improved response times, greater accuracy and advanced self-service capabilities can build borrower satisfaction. Utilization of lowest-cost resources: Cost-effective staffing provides scalability for economic swings. High-touch customer services: Pooled resources enable call center to answer quickly. Product development Sales POS Broker and consumer portals Loan setup Processing Underwriting Closing Funding Shipping Postclosing Vendor management services Servicing Secondary marketing IBM will manage the fulfillment process from application to secondary asset for all lending channels.

5 A family of benefits helps make lenders more competitive Reducing the pressures of a fixed-cost infrastructure Most mortgage lenders suffer from a fixed-cost infrastructure, and a resulting interest rate volatility that can cause margin erosion. The LBPS solution uses technology, digitization, workflow and automation plus large-scale, industryleading people and processes to create a per-loan cost structure that enables a more variable cost model. This model can improve lenders ability to manage marketplace cycles, for more consistent performance. Enhancing opportunities for new revenue streams Reducing costs is seldom enough lenders also need to increase revenue. LBPS can enhance revenue opportunities with increased loan throughput, greater scalability, shorter loan cycles and reduced time to market. Better cost management can create the flexibility and control of margins that lenders need to avoid the risk that their products might become commodities. Building efficiencies through automated processes The typical mortgage origination process is fragmented, complex and expensive. Inefficiency hinders regulatory compliance. And it can make it difficult to deliver a consistent quality of customer service. LBPS automation can have positive effects throughout the process, from reduced operating costs to increased revenue opportunities to enhanced customer satisfaction. Meeting customer needs with responsiveness and service In a competitive environment, residential mortgage customers can easily take their business elsewhere if a lender does not satisfy their concerns. The improved response times, quality data and advanced self-service capabilities of LBPS technology can improve the overall customer experience, however, encouraging loyalty and helping improve customer retention. Reducing complexity and redirecting energies toward results A volatile business environment is not a place to take unnecessary risks. But complexity, which contributes to risk, is inherent in many companies operations. Inefficient and obsolete technologies can force lenders to play catch-up and take risks to compete. But IBM can help reduce complexity, enabling lenders to reduce risk. Lenders can rely on IBM to make the necessary investments to deliver state-of-the-art technology and enhanced workflow to the loan fulfillment process.

6 Enabling the vision with people, process and technology Mortgage lenders know by looking at the past that change and challenge are a part of their business. A look at the present can reveal obstacles that stand in the way of improvement. But a vision of the future is crucial to making improvement happen. IBM s vision is that the right investments in skilled people, operational improvement and world-class technology can give lenders a powerful competitive advantage. It is firmly rooted in our deep industry expertise, operational capabilities, global reach, and industry-leading applications and technology. A global network of professionals ready today, building for tomorrow LBPS solutions leverage IBM s globally integrated capabilities and resource model. This creates the scale and financial stability that can improve fulfillment processes, lower costs and reduce complexity. IBM builds on more than 20 years of business process expertise in the mortgage field. The dedication and skills that IBM people bring to the mortgage industry are among our most important attributes and they are assets that set us apart in the marketplace. But LBPS services also are working to build additional capabilities within IBM and lender organizations. In an innovative move for the industry, IBM has created what we call the Mortgage Academy, a comprehensive training curriculum designed to build leadership, technical competencies, communications abilities and team dynamics. The Mortgage Academy sets IBM apart from other companies with its Program of Excellence, a curriculum of interactive learning programs, simulation and collaborative learning experiences created to build knowledge and enhance performance among IBM personnel and participating mortgage lenders. Processes designed to improve the flow of business LBPS processes are designed around task-driven workflows that can increase throughput, reduce cycle times and enhance the ability to expand and contract with marketplace changes. They are designed to meet a number of needs, including data security, regulatory compliance, vendor management, brand reinforcement, reporting, business intelligence, governance and service level commitments. To achieve maximum flexibility and best meet these needs, we employ various delivery models. We can leverage IBM s global delivery and outsourcing capabilities to deploy our world-class lending technology at the lender s location, host the technology platform at an IBM site or provide a fully outsourced fulfillment solution. For years IBM has built industry leadership and deep experience through outsourcing services for IT infrastructure, human resources, customer relationship management, and corporate finance and administration for the banking and financial industries.

7 Providing cutting-edge technology across the board Together with our process services, IBM s industry-leading mortgage technology enables lenders to replace fixed costs with a variable cost framework. Our recent acquisition of Palisades Technology Partners enables us to deliver the first browser-based lending application suite in the industry. Leveraging open standards and a service-oriented architecture approach, these applications are designed for maximum flexibility. And they make use of IBM s seasoned, industry-leading technology and loan professionals to help ensure that our software solutions meet lenders unique business models. Our fully outsourced model is a turnkey solution. IBM hosts applications in its scalable, security-rich, highly available technology infrastructure. We manage the platform backed by our industryleading resources and its reputation for service, availability and protection of client information and we provide ongoing development, upgrades and updates. Our fulfillment employees process loans while system components provide both operational and strategic analytics around the entire mortgage fulfillment lifecycle. Adding up benefits that change the way lenders do business Throughout the mortgage lending process, IBM s goal is to help lenders cost-effectively deliver mortgage products with a more predictable, reliable and consistent customer experience. Our services enable companies to focus resources on activities that competitively differentiate them strengthening and improving their brand, products, distribution network and service experience. They can help lenders overcome shrinking margins, reduced loan origination fees and growing commoditization across a cyclical marketplace. IBM can help create integrated and cohesive processes to take the place of today s highly fragmented, complex and expensive origination systems. We can meet the industry s growing demand for technologies such as Web-enabled and straight-through processing to build efficiencies that help lenders grow and thrive. We can support innovation and customization in financial products that are necessary for mortgage lenders to gain strategic advantage over the competition. By streamlining processes and reducing complexities that add time, expense and frustration to the mortgage environment, IBM s capabilities have the potential to fundamentally change the way business is done in the industry.

8 Why IBM? IBM has a long history of providing solutions for the financial industry. And LBPS is a natural outgrowth of our continued deep and rich commitment in this sector. With LBPS solutions, our industry expertise, industry-leading applications, and virtually unmatched technology and operational capabilities, IBM is helping to redefine how competitive lenders meet today s marketplace challenges. Our Lender Business Process Services can change business as usual in an industry bogged down by too much paperwork and too many manual processes. It can provide the outsourced automation necessary to make processes run more smoothly. IBM has made significant investments in lending solution software and service providers. And we plan to continue expanding our services to support a broad range of consumer and commercial lending products across geographic markets. We have made significant investments in creating scalable and reliable hosting capabilities and systems integration capabilities. We are committed to making LBPS an industry standard that changes the expectations of customers and changes for the better how the lending industry operates. For more information For more information about IBM Lender Business Process Services for mortgage origination and processing, LBPSinfo@us.ibm.com, contact your IBM representative, or visit: Copyright IBM Corporation 2007 IBM Lender Business Process Services, Inc IBM Drive Charlotte, NC U.S.A. Produced in the United States of America All Rights Reserved IBM and the IBM logo are trademarks of International Business Machines Corporation in the United States, other countries or both. FileNet is a registered trademark of FileNet Corporation, in the United States, other countries, or both. Other company, product and service names may be trademarks or service marks of others. References in this publication to IBM products or services do not imply that IBM intends to make them available in all countries in which IBM operates. ibm.com/services/process/lender GTB03002-USEN-00