Citicorp Mortgage has joined other large and midsize lenders that have been going to outside vendors for origination software.

The Citigroup unit, based in St. Louis, will use software from CFI Proservices Inc. of Portland, Ore., CFI announced. The system will automate each step of lending, from application to processing, decision-making, and closing.

Citicorp Mortgage said last week that the software would help ensure regulatory compliance in all 50 states. Implementation is expected to take several months.

Don R. Palumbo, a product manager for CFI, said, "From a technological standpoint, connectivity between systems is key in the mortgage industry."

In choosing the CFI software, Citi decided against continuing to use its proprietary in-house originations system.

"There's so much more data today that you won't survive as a lender if you don't move on to ... new platforms," Mr. Palumbo said.

CFI's Windows software supports risk-based pricing. Without a clean and quick handoff of data from point of sale to the secondary market to be hedged, there is more pricing risk, lenders said.

Mr. Palumbo agreed. "Your pricing will be way out of line from other lenders, so you're forced to adopt the new technology," he said.

Competing with CFI as a provider of Windows-based originations software is the residential lending division of Alltel Corp. of Jacksonville, Fla. Alltel is the leader in servicing software.

Chase Manhattan Mortgage of Edison, N.J., services about $180 billion of loans and depends on customized Alltel software for routine servicing functions such as taxes, insurance, and processing payments, according to chief operating officer Stephen J. Rotella.

"We use more than one in-house software system for origination, processing, and closing," Mr. Rotella said. However, he added, "there's no reason to go through the effort of building it yourself if someone else has done it quicker and cheaper."

For front-end functions, Chase is staying with its proprietary software- for now. Mr. Rotella said the banking giant is reviewing systems "to see if there are better alternatives" but that it is "satisfied for now with what we have designed."

Using only part of Alltel's system is not unusual, said Victor J. Soler- Sala, vice president of front-end systems and interchange sales at Alltel. "In general people buy the whole solution, but some just pick pieces," Mr. Soler-Sala said.

Edwin C. Ciskowski, vice president of research for SunTrust Banks Inc.'s investment banking and brokerage subsidiary, said banks "absolutely have to adopt systems" such as CFI's or Alltel's to be competitive.

"Long-term, more banking will be done on-line rather than in brick-and- mortar structures," Mr. Ciskowski said.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.