HomeComings Automates Loan Processing: Improves Service, Expects to Substantially Lower Operating Costs

When you're one of the biggest and the best in a highly technology-driven industry, you stay on top by having great people and state-of-the-art technology. To increase the effectiveness of their customer service program and decrease operating costs, HomeComings Financial Network, a subsidiary of GMAC-RFC, upgraded their loan processing with a Microsoft® Windows® DNA application that helps them improve service by 20 percent while expecting significantly decreased operating costs.

"This solution is critical to the process of effectively managing distressed assets. This system provides real-time decision support tools to ensure our employees optimize each and every outcome. Our asset managers can run a variety of scenarios and alternatives to see which works best for the particular loan resolution, allowing them to document and compare results in real time. Finally, the amount of data we're capturing enables ARD to perform sophisticated analytics which further refines our business processes."

Greg Zimmer, Senior Vice President

Situation

The financial services industry is fast-paced, extremely customer focused, and information-intensive. To survive in this highly competitive arena, businesses have to gather, manipulate, and package data accurately, efficiently, and quickly -- day in, day out. Errors are costly, and big dollars are at stake.

ARD, the Asset Resolution Division of HomeComings Financial Network, a subsidiary of GMAC-RFC, is in the business of acquiring and servicing distressed assets. These assets include sub-performing and non-performing loans and real estate from bank foreclosures. ARD applies its servicing techniques to both portfolios acquired at a discount (on a for-profit basis) and portfolios from its parent, RFC, on a mitigation of loss basis.

In its most basic sense, ARD's goal is to make bad loans good by having exceptional staff apply proprietary techniques and technology to the business. Historically, asset management was a cumbersome, paper-intensive process that was difficult to manage effectively. In the financial services world, that spelled trouble.

Business Solution

ARD needed a modern automated asset management system that could streamline the process and reduce or eliminate the opportunity for errors. The system also needed to be dynamic and flexible, compatible with existing investments, and able to be implemented using standard, inexpensive components.

To meet these diverse business and technical needs, ARD turned to the Microsoft® Windows® platform and chose Windows NT® Server and the Microsoft BackOffice® family as the foundation for their next generation of network-based applications. They selected Windows Distributed interNet Applications Architecture (Windows DNA) as the application framework of choice to build a modern, scalable, component-based information solution.

By adopting the Windows DNA model for application development, ARD was able to build a solution in just two months using six engineers. This solution delivered automated business processes and powerful reporting tools, with anticipated reductions in operating expenses.

This solution also simplifies the loan management process and helps ARD increase the effectiveness of their loss mitigation function, which minimizes losses within securities and maximizes profits within portfolios acquired at a discount. Currently, 30 staffmembers are using the solution to manage ARD's non-performing loan portfolio.

Increases Loan Management and Reporting Capabilities

To enter data and to manage loans, asset managers have on their desktops a component-based application developed using the Microsoft Visual Basic® programming system. To simplify application development, ARD created the user interface using ActiveX™ controls that handle the presentation of various system facilities such as decision-support tools, an online loan approval process, process monitoring, document imaging, call tracking, document tracking, and more.

These controls communicate via Distributed Component Object Model(DCOM) with Component Object Model (COM) components that are managed on the back-end by Microsoft Transaction Server. The components interact under transaction control with various stored procedures in a Microsoft SQL Server™ database to process system information. For security purposes, client-side controls have no knowledge of the SQL Server database; all database access is managed through a secure COM interface on the server.

Reporting to asset managers (property status, loan information, and performance tracking) is done over the Web via Internet Information Server (IIS). Using Active Server Pages (ASP), Web-based reports are assembled on the fly via scripts that invoke components in Transaction Server. These components query the SQL Server database and the output is converted dynamically to HTML. This whole process is automated so that Web-based reports are always accurate and up-to-date. Asset managers access the reporting system through a Microsoft Internet Explorer user interface.

Streamlines Asset Management Process

One example of how the solution streamlines the asset management process involves call processing. Before the solution was implemented, when a borrower called and asked about their loan, the staff person had to put the caller on hold, retrieve the file, look up what was needed (if it could be found), get back with the borrower, and answer the question (assuming all goes smoothly). With this solution, the staff person has the complete folder on the loan available on screen at the touch of a button. A solution function inventories all letters relating to the loan; if the borrower needs a letter, the staff person can fax or mail it to them immediately. This increases the efficiency of the staff person, puts the proper asset controls in place, and leaves an audit trail.

The solution also automatically sorts each asset managers portfolio and queues up what needs to be managed and when. This improves the efficiency of asset managers, reduces the amount of supervision needed in the loan management process, and provides better control of the borrower's processes. In addition, the decision-support tool of the solution helps asset managers make better decisions by allowing them to build alternative scenarios and choosing which scenario works best for each loan.

Reduces Operating Costs

Before this solution was implemented, loan approval was a paper-intensive process. With the online approval system, every loan approval is done completely online and is tied to various offers and sub-terms. With this solution, anyone can go back and see the full documentation of the approval on the system. The amounts of paper used in the process and the associated costs have been significantly reduced.

Benefits

From a development perspective, the biggest advantage of this solution is speed to market. The financial services industry as a whole is very competitive and very technology-driven. By using the Windows DNA model and Windows platform technologies, ARD was able to rapidly develop a solution that integrates easily with existing applications and meets business needs. This technology gives ARD tremendous flexibility; if business conditions change, they can reuse components and build new components and modules in 2-3 weeks; for example, the seven ActiveX controls used in the solution have only two properties exposed, which means they can be easily reused in future applications.

Once a business unit can define a problem, ARD can have a solution ready faster than their competitors. By having Windows DNA-based systems that can adapt rapidly to the business problems of the moment, ARD has a definite edge.

From a user perspective, the advantage of this solution is improved process management, better decisions, lower operating costs, and increased profits. And their growth in terms of employees is more effective with the solution in place. In addition, ARD conservatively estimates that the savings involved in managing portfolios completely online have resulted in a 20 percent decrease in need for staff involvement in the process (not that people are being laid off; the business is growing rapidly). And as the business grows, qualified staff are available to handle the increased workload because this solution does so much of the work that used to be done by hand. This also means that the number of new hires needed is also decreased by 20 percent.

ARD estimates savings attributable to the solution amount to over a million dollars, and they're just beginning to ramp up. The savings are just from a cost standpoint and do not include the value contributed by the solution in terms of better decisions and increased profits.

For More Information

For additional information about Microsoft products, call the Microsoft Sales Information Center at (800) 426-9400. In Canada, call the Microsoft Canada Information Centre at (800) 563-9048. Outside the 50 United States and Canada, please contact your local Microsoft office.

Microsoft Products Used

• Windows NT Server
  
• Microsoft Internet Information Server (IIS) version 3.0
  
• Active Server Pages (ASP)
  
• Microsoft Transaction Server
  
• Microsoft SQL Server version 6.5
  
• Internet Explorer
  
• Office 97
  
• Microsoft Visual Basic®

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