The Wakefield Company - Making It Happen

Case Histories

Processing and Infrastructure Reconfiguration

This client, a nationwide retail and wholesale mortgage bank, has had some internal processing challenges. Their cost to produce loans was substantially above industry averages. Loan application to loan closing cycle times averaged 33 days. Loan throughput rates have historically been in the 50% range. The number of loans processed per full-time processing employee has ranged between 9 and 12 per month.

We were retained to do an assessment of this client's loan processing environment. The client's stated objective was to reduce its annual loan production expenses by at least $25 million within twelve months. We visited this client's two largest production facilities and conducted extensive interviews with production management and line personnel. Using our Process Architecture tools, we defined the current production environment at the task level. We then developed an optimized production process using our simulation model. Our simulation model resulted in a three-phase transformation of this client's production environment. We then shared our findings with the president and his direct reports. These findings shaped a three-month strategic review which prioritized our findings in order of economic impact and ease of implementation.

Within eight weeks of implementing a pilot of the first phase of this three-phase transformation, this client's loan closing cycle time was reduced by more than 30%. Loan throughput increased to over 70%, and the productivity of processing personnel more than doubled to over 20 closed loans per month. Phase one has been implemented in all of the client's loan production environments. The client has documented a $22 million reduction in annual loan production expenses as a result of the implementation of phase one.

Phase two of this client's transformation focused on improved workflow and consolidation of job functions to minimize the movement of files and related documentation. This phase has been completed and the client has documented an additional annual cost reduction of $16 million.

The third phase of this client's transformation has begun. This phase will automate a substantial percentage of loan production tasks and will eliminate paper files from the loan production environment. We project that this phase will provide an additional $30 million of annual loan production cost savings.

We constantly measure our value contribution to our clients. In this case, our fees of approximately $2 million will result in annual cost reductions of over $65 million. That is real value!

De Novo Infrastructure Design and Implementation

A private and diversified trading and investment firm retained us to design and implement a de novo loan origination and production infrastructure. This client had spent months investigating the back office processes and systems which are prevalent in the U.S. residential mortgage industry. They concluded that there was a tremendous opportunity to build a de novo loan origination and production infrastructure that leveraged both robust process architecture and current technology to build a competitively preemptive capability.

Our design work leveraged the 3,100 discrete mortgage tasks that reside in our INPLORE™ database and allowed us to construct an Optimized Production Time Summary (OPTS) that depicted a loan origination and production infrastructure with the following attributes.

  • A web-based point-of-sale capability that leverages a proprietary product and pricing engine, automated underwriting system and third party compliance and fraud detection services.
  • A document conversion and management process that accommodates electronic loan application submissions and prevents paper from entering the loan production environment.
  • Integration with a vendor management system that provides the client with direct control over the velocity and quality of critical settlement services including property appraisals, title insurance commitments and policies and closing management.
  • A labor infrastructure that eliminates functional divisions and promotes a cross functionally trained resource pool that can respond to an event-driven orchestration layer that delivers work to the right people at the right time.
  • An event-driven orchestration layer that automates a high percentage of internal and external communications through system initiated alerts, messages, statuses and escalations.
  • A direct labor production cost of under $270 per closed loan.

Upon the client's approval of the OPTS, we created Task Level Detail which provides step level detail describing how each task in the OPTS is to be performed. Finally, we created an Infrastructure Blueprint which provides a graphical depiction of how the three fundamentals of loan origination and production – People, Process and Technology – are integrated to achieve the attributes defined in the OPTS.

This project is proceeding at a pace that is dictated by the somewhat uncertain status of the secondary mortgage market. When that market stabilizes and demonstrates an appetite for non-GSE eligible production, this client will emerge with a loan origination and production capability that is competitively preemptive.

Project Management

This client has historically operated a successful warehouse finance business. We helped this client devise a strategy for a web-based interface that would simplify the uploading of data from existing warehouse customers. We also suggested that this client expand its business by offering an end-to-end fulfillment capability for both new and existing warehouse customers. The online uploading capability and fulfillment service eliminate the client's primary risk factors and accelerate the loan funding cycle which increases capacity and revenue.

Aside from providing strategic input, we managed the implementation of the client's web-based functionality. This two phase project was completed, and the client has rolled out its fulfillment capability to both new and existing customers. Once this fulfillment capability gains traction, this client will complete its transformation by introducing a conduit operation that will provide it with direct control of all mortgage origination, production, financing, and securitization activities.

Strategic Alliance Formation

It is not unusual for us to foster alliances among our existing client base. A number of these alliances have formed over the past four years. The most noteworthy involves a client that develops and markets point-of-sale (POS) decision technology and another that has developed the preeminent vendor management software platform in the industry. The alliance enables a lender to fully automate the order of applicant-specific settlement services at the POS; provide the lender and its customer, at the POS, with a timetable specifying when settlement services will arrive in the lender's production environment; and electronically deliver settlement services to the loan production environment.

This alliance has the ability to substantially accelerate turn around time for settlement services. Accelerated delivery of settlement services lowers production expenses, increases capacity and increases loan throughput. This alliance will also allow our clients to offer a "bundled package" of settlement services without experiencing the operational or economic risk inherent in dealing with third party settlement services providers.

Print page Email a colleague