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TUKWILA, Wash. – By most economists’ estimates, the refi boom of 2002 and the period of record-low mortgage rates are beginning to wind down, but not before Prime Alliance Solutions closed its second year in business with nearly four times the mortgage loan volume it did in its first year of operation. Founded by Boeing Employees’ CU in January 2001 in partnership with Minneapolis, Minn.-based information technology company DEXMA and Fannie Mae’s Desktop Underwriter, the Internet-based mortgage lending CUSO finished 2002 with $8.5 billion in mortgage loan volume. One year prior to that, it did $2.2 billion in mortgage volume. Even given the exceptional mortgage rate and lending environment last year, BECU VP of Lending and Chief Lending Officer Joe Brancucci admits that growth “is remarkable.” He attributes it to Prime Alliance’s streamlined, easy-to-use, online program. “When we designed Prime Alliance, our intention was to have a product that would optimize all aspects of the mortgage lending process. Prime Alliance isn’t just about the technology, it’s a business solution,” Brancucci said. What was pre-Prime Alliance mortgage lending life like for the $4 billion BECU? Labor and time-intensive are words that come to Brancucci’s mind when he recalls how BECU handled members’ mortgages in 1998. “Members were practically sleeping in the lobby. They wouldn’t leave until they could see a loan officer,” he recalls Paper-based applications – the standard 1003 form – completed manually by the member and a loan officer were the only way to originate mortgage loans at BECU. “Applying took two hours for each member, and the maximum number of members we could serve each day per loan officer was three,” Brancucci said. Knowing it was just a matter of time until the next refinance wave hit, and determined not to have a repeat performance whenever that happened of what BECU had to deal with in 1998, the credit union got to work to figure out the source of its problem. The culprit was starring them in the face. “We determined that the standard mortgage application form, the 1003, was the crux of the problem. Given today’s fast-paced world of busy lives and automation, it was hopelessly outdated,” said Brancucci, “so we set out to eliminate it and create the paperless mortgage.” Working with Dexma, BECU started out developing a mortgage lending solution that was originally only supposed to benefit Boeing Employees – and it did what it was designed to do. In 2001 when Prime Alliance opened its doors for business as a C Corporation CUSO, Boeing did $700 million in first mortgages. In 2002 it did $1 billion. In addition, the origination cost per loan at the credit union dropped from $1,273 to $338. In November 2001, Patelco CU, San Francisco, Calif. became the first CU to sign on to Prime Alliance. To date, 230 credit union credit unions use the solution including 21 of the top 50 CUs in the U.S. and 15 of the top 30 mortgage lending CUs. BECU continues to hold a majority ownership of the CUSO, but 10 credit unions and DEXMA hold a minority share. The 10 CUs are Patelco CU, San Francisco, Calif.; Vandenberg FCU, Lompoc, Calif.; Pentagon FCU, Alexandria, Va.; Kinecta FCU, Mountain Beach, Calif.; America First CU, Riverdale, Utah; Pennsylvania State Employees CU; SunCoast Schools FCU, Tampa, Fla.; Community Credit Union of Texas, Lockheed FCU, Burbank, Calif.; and Mission FCU, San Diego, Calif. In 2003, Brancucci said BECU plans to “dilute its overwhelming ownership” of BECU during the year. The credit union though, he said, will still own a majority share. The Prime Alliance solution is targeted at credit unions of at least $250 million in assets. A less customized version of the product, Prime Alliance Lite, is available for small CUs that aren’t large enough to support a full mortgage loan origination system. In September 2002, Prime Alliance and CU National Mortgage announced a nationwide turnkey mortgage services program that offers a variety of mortgage services to CUs. Participating credit unions can choose from three options – the “full service’ solution; the “enhancement” solution; and the “CU Choice” solution. The following month, version 3.2 of Prime Alliance was released. Brancucci describes it as “a new generation of Prime Alliance and the first that allows the online ordering of real-time legal disclosures” such as appraisals and titles. Version 4.0 of Prime Alliance Solutions is expected to be released in mid-2003. Brancucci said it will include several new components, including second mortgages. -

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