BOSTON -- The guest speakers at the Mortgage Bankers of America's 94th Annual Convention and Expo here Oct. 14-17 had that "Who's Who" cache, with Richard Branson (Virgin Airlines) Bono (U2), Doris Kearns Goodwin (Pulitzer Prize-winning historian/author) and George Foreman (heavyweight boxing champion) on tap. A panel presentation on Oct.16 also featured Joe Brancucci, SVP at BECU, Tukwilla, Wash., and president/CEO of Prime Alliance on how the credit union has championed availability of the electronic delivery of mortgages.

BECU recently had its first successful e-mortgage closing, and Brancucci gave the audience the vitals of BECU's mortgage program and an overview of how it developed the member experience over time into a streamlined, efficient, member-friendly operation.

A dose of reality and truth found Brancucci telling the crowd, "Getting a mortgage from the credit union was time consuming, fraught with miscommunication, displeasing to our members and horribly inefficient." Members expected better service from the CU and BECU "routinely disappointed" in that sphere even while surpassing in other service and product deliver, he said.

And while BECU "didn't go paperless overnight," it did make incremental steps leading to that goal "as technology and the industry allowed." Members noticed immediately, said Brancucci. "Shortly after launching our online lending presence, more than 65% of our applications became self-originated by our members. No more waiting for an appointment. No more waiting for an answer. We then took the next paperless step: electronic disclosures. Not only were members pleased to have this information immediately rather than three days later, it saved us a significant amount of money."

Next came online/real-time updates that informed members about progress. The next hurdle was about taking the stress out of closing day. A big leap came when BECU could deliver every closing package to the escrow company one week before closing, allowing for a thorough and unhurried review by the closing agent. "We have many closing agents in Puget Sound who've remarked to our members that they really appreciate BECU closing packages because they're on time or early, and they are accurate," Brancucci said.

Then, two years ago, BECU began electronically delivering the closing package to the member in advance of the closing. That way, if members have questions, they can call the CU. Going completely electronic and fully paperless is another, but probably not the final step. But it's likely to be as well received as the earlier advances, he added.

Going Paperless

Two years ago, BECU began to originate and process without paper. That meant no paper applications, no paper files, and no paper documentation. The mortgage staff, call center staff, branches and members use the online, real-time technology for progress on every member loan.

One of the measures BECU uses, Brancucci said, is closed loans per FTE per month. "We're consistently handling 18 closed loans per month per mortgage employee, easily twice the national average. Our cost to originate has plummeted by as much as 62 basis points per loan. In a commodity business, where price matters, this helps us not only compete, it helps us lower the cost of homeownership for our members."

He pointed out the corollary advantages that have disappeared along with all that paper. There are no missing files to track down. Time savings translate into more time available to spend with members. And there's no storage headache either.

How much more can BECU expect to save? "We'd like to see the 62 basis point number in savings get closer to 100 and we think we can do it." Overall, going paperless means that BECU can close faster, giving it a competitive edge in its market.

"Reliable, accurate service is the new competitive differentiator for mortgage lending, especially after what's gone on with sub-prime lending in the past 12 months. We're not only ready, we're ahead of the industry," he said.

How'd They Do That?

Prime Alliance Solutions, Inc., partnered with Dexma in building the industry's only online, end-to-end mortgage manufacturing platform that exists today, Brancucci related. That platform made it all possible, but it wasn't that simple, either. "You simply have to have the organizational will to bolt the technology that already exists together and implement the cultural change it requires," he said.

Technology alone won't cut it. It's people's resistance to change that must also be overcome, he admitted. "It's all our nature, so don't go buy a bunch of technology without first having the fortitude to culturally change your organization's mindset," he warned. It was no surprise that some processors secretly bought file folders and smuggled them into their offices so they could cling to traditional paper processes.

The last hitch is to partner with a strong, committed secondary market partner, Brancucci said. "For BECU and for many credit unions, that partner is Fannie Mae. We've been working together for almost ten years on the ongoing evolution of our mortgage strategy. They've stayed with us through the incremental changes, allowed us--even encouraged--to challenge their traditional processes, and brought us innovations like the fully electronic mortgage."

Right now, borrower confidence is rattled, he said. Borrowers want efficiency and reliability and while a lender can be reliable without going paperless, it's much harder (and will soon be impossible to be efficient and cost effective with a paper burden.

Brancucci's final advice was to go headfirst once the decision is made. "No long pilot programs, no testing the waters. Do it all, do it completely and everyone will be the happier for it," he said. His final prediction is that mortgage lending will be a paperless business within three to five years. "The most competitive of us are there now. Those that wish to catch up better start now. Those that hesitate, well, those that hesitate are lost."

--cburger@cutimes.com

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BECU Offers Paperless Mortgage Story At MBA Conference

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