Burning Up the Paper Trail
Mortgages are the most paper-intensive aspect of a still-very-paper-oriented financial services industry. Mortgage lenders operating across states need not only to be able to create all the documents for producing, closing, and servicing a loan, but also to have those numerous documents adhere to the regulations of each state as well as those of federal statutes.
The volume of documents -- and the constant modifications required for business and regulatory reasons -- was becoming a problem for Michigan-based Origen Financial. Origen, which specializes in originating, producing, and servicing loans for the manufactured-housing industry, wasn't able to take on any additional lending or to pursue a desired expansion into a new line of business, according to Paul Galaspie, the lender's chief information officer.
"We wanted to go into the direct lending channel, but we had paper stacked three to four feet tall of documents that needed changes -- and they sat there for three to four months," Galaspie says. "The document origination system was inside the loan origination system -- there was no easy way to generate documents without going into [it]."
The queued-up paperwork would have taken a year to tackle, limiting the lender's potential workload. "Our sales guys were going nuts -- we couldn't take on any more business," Galaspie says.
In addition to enhancing customer service and expanding sales, the lender (which had become a public company in 2004) required a less cumbersome system to satisfy Sarbanes-Oxley rules for an easy audit trail across the enterprise. The system also had to automatically produce all the necessary paperwork -- lending forms, notices, and other documents -- for origination, processing, and servicing of mortgages. Gauging enterprise content management (ECM) offerings from a handful of different vendors, Galaspie learned these systems were primarily for document retention and recall, not new-document generation.
Also, most vendors leveraged Microsoft Office, which Galaspie found inadequate for generating the large number of required documents. Other vendors leveraged Adobe's document-generation engine, but that system was too technologically cumbersome for Origen's needs.
The last enterprise content management vendor that Galaspie talked to was FileNet, now part of IBM. Like the other ECM systems, FileNet's P8 was primarily for content and document management and workflow, rather than generation, but FileNet had a partner: Thunderhead, which has a content generation application that produces documents in a variety of formats, including faxes, word-processing documents, and Adobe's popular print document format (PDF).
"That became the critical piece of the [FileNet] application for us," Galaspie says. In fact, the Thunderhead application was installed first, in early 2006, followed by FileNet and the eventual linkage of the two systems. Three months later, Origen was able to sharply reduce the amount of time needed to make document changes. With the old system, a full-time employee had spent his entire time making those changes; the new arrangement requires just 20 hours a month, Galaspie says.
Origen has not only been able to clear up the previous bottleneck, but has also expanded to handle similar needs for other lenders. In the year since implementation, loan volume increased 6 percent, despite a 13 percent drop in the number of applications.
Galaspie expects the system will encompass all servicing work for Origen's own loans and those it handles for other lenders, and foresees documents in different languages and electronic versions of documents that won't need to be printed at all. "That's the story that has yet to be written," he says.
With the document-generation application working in conjunction with enteprise content management software, Origen Financial has been able to:
- increase loan volume 6 percent despite a 13 percent drop in applications;
- reduce from 40 hours to five hours the time required each week to make document changes; and
- expand operations to handle document generation services for other lenders, resulting in additional fee income.