Leading The Mortgage Industry Into the Future:

Creating a New Paradigm Through Technology

The GreenPoint Mortgage Example

August 20, 2002

CIO 100 Symposium

© 2002 Infosys Technologies Ltd. Strictly private and confidential. No part of this document
should be reproduced or distributed without the prior permission of Infosys Technologies Ltd.
Industries, Both Domestic and International Companies Are Under
Significant Threats to Profitability

This presentation highlights how one company, GreenPoint Mortgage is responding to

the challenge

We will review :

The external forces and internal challenges GreenPoint has faced

GreenPoint’s technology enabled response

How its response is repositioning it from a competitiveness angle

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The Mortgage Industry Is Not Immune to Outside Forces – In This Case, It Is
a Combination Demographic Changes, the Market Dynamics and Regulatory
and Legal Requirements Evolution

Forces

Demographics Market

Baby Boomers Echo Boomers

Aging Emerging Refinance Wave New POS Model

1990s
Immigration
Wave

Regulatory / Legal

RESPA Reform

Government
Sponsored Entity Predatory
Reform Lending Laws

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Coupled With These Changes in Industry Structure, GreenPoint Mortgage
Faced Several Internal Circumstances Which Caused It to Pursue a Hybrid
Model Focusing on Both High and Low Margin Products

 In June, 1999, GreenPoint Financial

 GreenPoint Mortgage is a premiere
specialty finance lender in the
United States
o 24 branches nationwide
o 300-400 products
 Size of business
o Loan Originations = approx $2bn /
month
o Loan Servicing Portfolio = approx
200,000 active loans
 GreenPoint Mortgage Wholesale
(broker originations) division
contributes to 85% of the business;
The other divisions include Retail,
GreenPoint Express, and
Correspondent
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purchased Headlands Mortgage Company
and merged it with its existing mortgage
operations
 As a result of the merger, GreenPoint
Mortgage inherited a portfolio of diverse
products and processes, business partners
and technology platforms
o GreenPoint’s mortgage operations
was an inventor of the True No-Doc
mortgage
o Headland was an inventor of the suite
of Alt –A mortgage products
o These two mortgage products
allowed GreenPoint Mortgage to
become a leader in these respective
markets
 Headlands was on a mortgage processing
platform which had to be urgently
reengineered as it had several Y2k
compliance issues
To Execute This Strategy, GreenPoint Realized It Had to Address Several
Process and Technology Inhibitors

Business Strategy Inhibitors

Develop a Hybrid Processing

Model Origination Process
 Permitting profitable delivery of Paper Intensive Process Model
Low margin products
Frequent Manual Activities
 Requiring the support of
technology enabled Low Touch
processes High Processing Costs

 Capable of Supporting 2 Times the

Transaction Volume in 24 Months

Technology Servicing Process

Inadequate Data Center Lack of Scale of Economies

Limited Use of Leading Low ROE, High Cost, Manual

Technologies Process

Challenge in Recruiting Skilled

IT Professionals

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 GreenPoint Mortgage Is Choosing to Address the Situation With Several
Technology Enabled Strategic Business Initiatives

Strategic Business Initiatives

Transforming Origination and Servicing

Creating a New Loan Servicing Paradigm
Processes Using Technology and
– Business Process Management
Workflow (BPR)
Leveraging a Global Delivery Model

IMPLEMENTATTION CHALLENGES : IMPLEMENTATION CHALLENGES

• Inertia of legacy systems and processes
• High loan throughput volume
• Complicated Knowledge Transfer and IT
infrastructure transition processes
• Cultural and organizational behavior
patterns

Designing the Next Generation IT

Architecture

IMPLEMENTATION CHALLENGES
• Fragmented and immature mortgage technology market
• Training internal staff on next generation technologies
• Transitioning to a ‘Business Partner’ rather then ‘IT Vendor’
approach to inter-firm relationships

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 Infosys Partnered With GreenPoint to Structure These ‘Strategic’ Initiatives
Into ‘Tactical’ Projects Thus Taking Them From Concept to Completion
•Performed high level design and •Implemented an Imaging
•Redesigned selected a robust Imaging system system for Post closing and
Processes for all BUSINESSS primarily targeted at post funding Warehousing functionality
business channels and PROCESS functionality
post funding REDESIGN IMAGING SYSTEM
functionality IMAGING ROLLOUT
PRODUCT
SELECTION
•Implemented BPR
•Documented functional LOS recommendations related to
and technical PACKAGE
SELECTION •Defined Architecture for Origination Processes
requirements and
selected LOS package Next Generation LOS
IMPLEMENTED BPR
ARCHITECTURE RECOMMENDATION
DEFINITION S
•Analyzed Loan Servicing
and Origination •Implemented the Next
Processes to identify •Selected Consolidated Generation LOS
candidate processes for BPM
Rules Engine
ASSESSMENT
transitioning to a BPM
RULES ENGINE LOS ROLLOUT
model
SELECTION

•Stabilized offshore BPM

•Transitioned Pilot Loan Servicing
BPR model for pilot processes
Processes to a BPM model
IT ARCHITECTURE

BPM BPM
BPM
TRANSITION
EXECUTION
MANAGEMENT

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 The Business Process Initiative Had Several Significant Impacts to the
Business – Toping the List Was Streamlining of Document Management
BUSINESSS
Processes Using Imaging Technology… PROCESS
REDESIGN
External Entities
Corrected Docs
Corrected 12 22 20 Final legal 17 Original Legal
Docs 14 24 file Docs

Investor Corrected Document Corrected Legal File Doc Logging

10 13 Docs 23 18
Suspense
Suspense Correction Docs Review and Filing
Legal files
Items from 21
investor 11 Document
19

Corrected docs Image

X 25
for scanning X
Centralized
Imaging Team

Centralized
scanner Document
Image 4

New Loan Base

File for Scanning

2 New loan
26 Corrected docs
for filing Base file
New Loan
Closing and Closed Loan Collateral Records 3
1 File 8 Servicing
Funding Vault Management
X Set-up
9 Note Release
Collateral Note Requests
to Investors File Request
Servicing X
Secondary Loan Delivery / Servicing
5 Trade 6 15 Sales
Marketing Sheets Shippers Transfer
Transfer
7 Base file Docs 16
to investors

External Entities

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 BUSINESSS
... Which Had a Real Impact to the Bottom Line PROCESS
REDESIGN

Investments of $1.8m with an

expected payback of 18 months

140%

Investments Cost Savings

120% Storage

100%
Services User
Software Retrieval
80% Costs

60%

Hardware
Costs Copying &
40%
Shipping

20%

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 The Business Process Management Initiatives Was Created to Address the
High Fixed Servicing Costs and in This Project Technology Was Leveraged
to Erase the Boundaries of Where Business Process Work Is Performed…
BUSINESS
PROCESS
MANAGEMENT

ONSITE
Loans Mortgagor Mortgagor County Mortgagor Attorney New
Investors
Originated and Letters Phone Calls Office Payments Firms Servicer
bought
`
Mailroom Satisfaction Payment
Processing Processing

Servicing Sales
Transfer

Investor
New Loan Reporting
Servicing Payoff quote Bank
Customer Service
Set-up generation Reconciliation
Financial
Investigation
OFFSHORE
Escrow Analysis

Insurance Foreclosure
Services Collections &
Loss Mitigation
JIT Pay
Tax Services Bankruptcy

Special Loans

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…Which Is Contributing to Reducing the Costs of the Loan Servicing
Process and Build a Competitive Edge in the Servicing Business
BUSINESS
PROCESS
Loan Servicing Cost can be reduced MANAGEMENT

by as much as 20-25%

Current State Future State

100%

BPM Savings

80%
BPR Savings

60% Current Loan Expected Loan

Servicing Cost Servicing Cost

40%

20%

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 The IT Architecture Initiative Identified First Year Cost Savings of 20% and
Produced a Next Generation Architecture Model to Support GreenPoint’s
Ambitious Growth Plans IT
ARCHITECTURE
DEFINITION
Email / Fax Servers N- Tier LOS
Web Front End
Fax Interface Core LOS Functionality
Pricing Application

E-mail interface Automated Underwriter (AU) Credit Admin / Risk Analysis

Module
Pipeline Management
Aux. Interface Server Treasury Recon Module

Secondary Query / Pricing

Web Publisher
Module

CD Writers Application Server

Workflow Application
Consolidated Rule Engine
Reports
Bid Management Application
Audit Trail

Archival Tool

Scanners Imaging System

Image
Backup Print Index LOS DB
Da1tabase
Scanning/ Indexing Interface Manager
Workstations
OCR & Disk controller
Archive
Scanner manager Optical DB
Standard LOS functionality
Juke box
New LOS related functionality

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 Some of the Other Tactical Initiates Which Had an Impact to the Bottom Line
Was the Implementation of an N-tier Architecture and the Incorporation of a
IT
Global Model for Execution of Software Development Process ARCHITECTURE
DEFINITION

Implementation
of an offshore
based
operating
model along
with a
redesigned
issue
resolution
process can
significantly
reduce
operating costs

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 Yet, There Are Other Technology Initiatives That Can Anchor a Forth Track
for GreenPoint, and Other Companies – Infosys Is Monitoring Mobile
Technologies and Assesses They Are Approaching a Pragmatics State
` Telecom
eBusiness Securities trading
Utilities Retailing HIGH IMPACT
Integrated

Location critical
Supply Chains HealthcareTravel
mBusiness Entertainment

Anywhere
Shopping High Tech
Remote Asset Banking
Marketplaces mSales Force MEDIUM IMPACT
Management

Customer Relationship Wearable Devices/ Heavy Consumer products

Management Apps industries
LOW IMPACT

Entertainment
Time critical
Anytime Source: Infosys analysis
M- Business Is a Natural Extension of Yet will impact each industry
the eBusiness Wave differently
Account
Status

In Financial Services, m-Business

Payment Transaction
will enable the convergence of Processing C Status
services at the customer
Bill
Presentation
and
Payment
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 S. A. Ibrahim
President and Chief Executive Officer
GreenPoint Mortgage

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