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   ARTICLE   |   From Scotsman Guide Residential Edition   |   September 2005

Loan Processing Overseas

Is offshore outsourcing worth trying?

Recently, offshore outsourcing has come out of the shadows and into mainstream America. Whether you’re calling your phone company or making travel plans, your 1-800 call might be transferred to someone overseas — and you might not even know it.

Why the trend toward offshore outsourcing? As consumers continue to seek products and services that are faster, cheaper and better, companies are looking abroad to gain efficiency. Thanks to the Internet, leveraging services from overseas is easier than ever.

Benefits for mortgage originators

Traditionally, offshore outsourcing has been a competitive advantage that only larger enterprises could pull off, but that has changed. Companies have emerged that empower brokerages to take advantage of offshore loan processing with the efficiencies previously limited to large lenders. These advantages include steep discounts on loan processing, faster processing times, 24/7 customer service, greater convenience and a better audit trail.

Deep discounts in loan processing appear to be the biggest benefit to offshore processing. In some cases, loans can be processed at almost half the price of domestic-outsourced processing, cheaper than in-house processing and approximately 40-percent faster. Loans can be processed at all hours every day. 

Good enough for the large lenders

These considerable efficiencies have addressed some concerns about sending work abroad. Even some of the nation’s largest lenders have been counting on offshore services for their business operations.

Recently, one major lender found that when consumers chose between having some loan functions processed domestically and doing so faster and cheaper overseas, more than 87 percent of their consumers opted to go overseas.

Processing alternatives

Whether originators have in-house processors or rely on contract-processing services, offshore processing is an option. For those who wish to keep their in-house processors, offshore processing can offer a cost-efficient option for handling higher-than-average loan volumes without burdening current processors.

It can also provide a backup when processors go on vacation or leave. It enables a company to scale its business while controlling costs. Offshore processing allows others to outsource processing chores when they re-assign their processors to revenue-promoting tasks.

For companies leveraging domestic-contract-processing services, offshore entities provide a cheaper, quick alternative. Instead of paying more than $400 per loan and $100 to $150 for a canceled loan, originators can expect to pay $200 to $250 to process files overseas and around $30 for a canceled loan. Furthermore, offshore companies feature groups of processors that work on files methodically as a team; no one processor can hold up a file from expeditious processing.

Technological aspects

Technological advances have made it easier to work with companies overseas. Brokers can e-mail and upload electronic documents on the Internet, send faxes or make calls into a 1-800 number that automatically connects callers to agents overseas. Other than a possible foreign accent, it’s difficult to know whether the loan processing is taking place in Bangalore, India, or Milwaukee.

Offshore-processing companies also have produced software programs that let originators submit loan files. The process can be simple: Originators fill out an online form and submit documents for processing. These documents can be sent electronically or faxed. The forms can be mailed to the processor at a U.S. mailing address.

At every step in the process, originators are notified of the loan’s progress and can view its status online. Processors also are available via e-mail or phone.

Offshore services also can keep files digitally, rather than on paper. This can help originators go paperless without investing in the necessary infrastructure.

Test-drive change

Probably the hardest thing that we can ask people to do is change. When it comes to processing, which requires great attention to detail and follow-up, releasing the reins to processors located across the globe can seem daunting. It’s a security blanket. In reality, not having a processor in the same state or office makes little difference; we generally communicate by phone and e-mail.

 Luckily for originators, it’s easy to try offshore loan processing without committing to dramatic change. Test-driving one loan can be all it takes to believe. 


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