TheMReport — News and strategies for the evolving mortgage marketplace.
Issue link: http://digital.themreport.com/i/488965
Th e M Rep o RT | 21 Feature Th e M Rep o RT | 21 T he mortgage insurance (MI) industry has been through quite a transition over the past several years. Those in the business in the early 2000s remember offices with file cabinet-lined walls, rooms jam-packed with boxes, and stacks of paper with brightly colored tabs and folders. Paper files were shuffled from desktop to file box and shipped to company headquarters, investors, and third-party vendors. During the boom years, the mortgage industry was a loyal friend to office supply stores with a seemingly never-ending need for paper, folders, staples, toner, and storage boxes. Mortgage profes- sionals relied on strict organiza- tion systems, but it could be difficult to know exactly where each loan was in the process. Automated workflow systems existed, but they were not yet tied to the loan files because the actual loan files were sitting in folders. Fast forward a few years, and a mortgage office looks quite dif- ferent. File cabinets are few and far between; stacks of paper have dissipated, making room for sleek 20-inch monitors, and colorful file folders and tabs have faded to a distant memory. Today's industry is characterized by digital pro- cesses that transformed mortgage documents from a tangible object to an easily accessible, secure, mobile, intangible entity. The Paper Trail I t was the refi boom of 2003, and underwriting offices were crammed full of paper loan files that had been faxed, mailed, or hand-delivered. At, MGIC, for example there were so many files to process the company had 20 underwriting offices across the country to manage the intense workload. In comparison, MGIC has just five underwriting of- fices today. The refi boom also corresponded with a boom in contract underwriting service offerings, which was a very paper-intensive process. Many mortgage insurers hired interns to help their underwrit- ing teams handle all the paper- work. In fact, it was common to see entire rooms devoted to handling incoming files. It was quite a process when the morn- ing mail deliveries arrived and the team of interns proceeded to convert incoming envelopes into workable loan files. If one underwriting office had a lighter workload than another, that office would often box and ship files to another company office to more evenly manage the pipeline. After the underwrit- ing was complete, it was time to ship the loan files back to headquarters' distribution center for permanent archival. Permanent file archival was an entire department at many MIs. They had all the tricks of the day—microfiche, microfilm, and sophisticated file catalog systems. A request to retrieve a file was a multiday process. The complex- ity of it puts the Dewey Decimal system to shame. Road to the Digital Age M GIC was one of the first companies in the MI in- dustry to move away from paper loan files and turn to digital file processing and storage. Doing so ultimately gave the company a huge advantage in terms of cost savings, improved customer ser- vice, and simplified operations. Initially, companies like ours simply began scanning paper files and digitally archiving them, eliminating the need for paper storage and shipping. This was an excellent first step in that it gave MI copanies experience with the high-speed scanning and the technology required to digitally store loan files. Moving paper files to the shredding bins was a scary step as the MIs slowly began to trust electronic image storing. Cost savings were immediate at MGIC—there was no longer a need to ship loan files from as far away as Puerto Rico to Milwaukee. The next step was to scan the paper loan files upon receipt and create a paperless workflow and under- writing process. This too was a culture shock for people who had spent their entire careers working through paper files, scribbling notations as they went along. What on earth happened to those rubber thumbs the un- derwriters used to rifle through the paper? The final step was when customers became paperless themselves. Now MIs were able to receive loan files digitally, skipping the paper delivery step entirely. Suddenly the ben- efits MIs saw from a paperless environment had spread to their lender customers who were able to securely upload loan files. Now their RUSH files really could be rushed. From Paper Trail to Super Highway How the Mortgage Insurance Industry Traded Its Unwieldy Paper System for Sleek Digital Processing By Jerry Murphy