CHARLOTTE, N.C. — IBM Lender Business Process Services Inc. and Coastal Federal Credit Union have entered into a five-year contract whereby IBM will provide comprehensive private label mortgage loan fulfillment services.
As part of the agreement, IBM Lender Business will provide $1.9 billion Coastal with a full range of lending services, including loan application processing, underwriting, customer care, vendor management, document preparation and loan closing coordination.
The IBM unit said the arrangement will enable Coastal to replace much of the fixed costs associated with typical loan fulfillment operations with a variable-cost framework, freeing employees to focus more on providing better personal service and support to members. This deal is anticipated to lower mortgage origination costs for Coastal by 30% to 40% and provide best in class functionality to rapidly scale to meet market demands.
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"The current mortgage market is placing lenders under pressure to manage an inherently high-cost, labor-intensive process," said Coastal President/CEO Larry Wilson. "By leveraging IBM's industry expertise and leading applications, technology and operational capabilities, Coastal will be better able to facilitate, manage and streamline our business processes to reduce costs and increase efficiencies in our operations, which will ultimately allow us to provide better services to our members."
Greg Sullins, executive director of IBM Lender Business, said the current mortgage environment "has clearly exposed pain points on a much more rapid scale for lenders than one would have ever anticipated."
"We are excited about the trust Coastal has placed in us and see a growing trend by other lenders to tap into superior capability that otherwise would be too costly to develop and maintain alone," Sullins said.
In related news, IBM announced that it has opened a 250-seat Lender Business delivery center in Charlotte, N.C. The new operations center will provide complete outsourcing and processing services for mortgage industry clients, the subsidiary said.
Coastal, which launched Daymark Realty in December 2007 and has been offering mortgages for more than 30 years, officially launched its member business lending program in 2003.
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