TheMReport — News and strategies for the evolving mortgage marketplace.
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Feature Lean Manufacturing in Action A mong the many challenges lenders face in modernizing their operations, four areas are most in need of attention: Communication. Enable borrowers to track the real-time status of their loan so that they feel like they are a part of the process, and to specify how and when they want the lender to communicate with them. Rules-driven workflow. Workflow processes should organize and distribute work requirements based on the status of other activities or the introduction of new data into the file. In a rulesdriven workflow environment, underwriters and processors no longer must memorize a checklist or rely on instinct when completing a task. Instead, written rules logic and workflow automates the "pull" process by dropping work into the next available work station. Thus, instead of underwriters reaching randomly for the next file to work on, the system drives the next "most eligible" file to review to the next available underwriter based on his or her skill level and SAFE Act licensing. Specialization. The roles of underwriting, processing, and closing should each be broken down into subsets of activities that can be far more efficiently managed. For example, the job of processor can be reorganized around five separate components—income, assets, Use measurement and monitoring tools to identify process constraints, attack constraints, and sources of waste; continue perfecting the value stream. appraisals, insurance, and title— with each processor assigned to handle one of those tasks. Placing tasks into discrete buckets enables more standardization and higher productivity in fulfilling loan files. Additionally, training subspecialists to handle a single task takes far less time than training an individual for broader job profiles. Compliance. Compliance and quality audits should be inserted throughout the loan process, from application to funding. This helps ensure that the data in the file is accurate, properly computed, within the boundaries of investor eligibility parameters, and is complete enough for the next process to occur without having to rework or send the file back for inaccuracies. Keeping the loan compliant, creditworthy, and complete at each milestone eliminates surprises at closing, reducing the likelihood of material defects that could result in loan buybacks. The credit industry lags dramatically behind the auto, aerospace, textile, and electronics industries in adopting and customizing Japanese manufacturing principles. Industrializing the loan fulfillment operation requires rethinking process design, enabling workflow through business rules logic and technology, and applying analytics to monitor performance. Doing so will create empirical definitions of what is working and what is not, thereby enabling lenders to improve quality, decrease costs, and comply with regulations. Design processes, services, and products that generate value and differentiate capability in terms of service quality and cost containment. Key Principles of Lean Design Create just-in-time delivery model with few or no queues where work stops while waiting for attention; eliminate wasted time and effort. Produce on demand as work is presented. What is the step action workflow that yields the most efficient production? What are the unnecessary steps that create waste? What are the non-value steps? Create a value stream model that optimizes value in the most efficient manner. Eliminate steps from the value stream that can result in increased holding patterns, re-work, delay, or defect. Rework steps to eliminate value erosion. Source: Accenture 26 | The M Report