As refinancing requests gum up the works at many home lenders, Castle & Cooke Mortgage LLC is promising borrowers that it can close most loans within three days of receiving an application.
Matthew Pineda, the Salt Lake City company's president, said a completely paperless system and accommodation by its warehouse lenders, appraisers, and title companies have allowed Castle & Cooke to accomplish this feat.
Observers said big lenders, including Wells Fargo & Co. and Bank of America Corp.'s Countrywide Financial Corp., take 45 to 60 days to close a loan.
Many lenders have antiquated loan origination systems and have cut back on production staff in recent years. That has made handling a recent spike in applications difficult as historically low interest rates entice borrowers to refinance.
Mr. Pineda, who calls himself "a total psycho-obsessive freak for service," said it takes his company's two underwriters just 30 minutes to vet an application. (It has a total of 168 employees.) Each underwriter uses two computer screens and a mouse to navigate through digitally scanned documents, which typically run 150 pages per loan.
"If you're thumbing through a paper loan file, you spend a lot of time rummaging through the documents," Mr. Pineda said. "But we can click on the document and the section you want pops right up in front of you and takes away the desk work of moving through a file, so they move very fast through underwriting."
Not all loans can close so quickly, however. Castle & Cooke's three-day guarantee is conditional on credit approval; the receipt of W-2 forms and pay stubs as well as an appraisal; a clear preliminary title; and proper insurance coverage, Mr. Pineda said. "I'm totally subject to appraisers and title companies, and I hope that they'll staff up so we can continue at the pace we're on."
Scott Stucky, an executive vice president at DocuTech Corp., a mortgage document and delivery provider in Idaho Falls, said closing a loan in three days "is not that hard."
"A number of companies that are classic small entrepreneurs are capable of doing a three-day close, but they have to break through the mind-set of handling paper files," he said.
Terry Wakefield, the chief executive of Wakefield Co., a Grafton, Wis., mortgage consulting firm, said most large lenders' origination systems are at least 10 to 15 years old.
Though the technology exists to dramatically reduce turnaround times, Mr. Wakefield said, most lenders still rely on paper files. Often, a processor, underwriter, and closer will each review the same file at different times, stretching out the process.
"The amount of rework that occurs is stunning," said Mr. Wakefield, who said he has examined 27 loan production offices in the last five years.
Castle & Cooke, which makes loans through 14 branches in 10 states, expects volume to more than double this year, to $785 million, Mr. Pineda said. It sells its loans as a correspondent to a handful of large purchasers.
He said the lender has benefited from the deep pockets of its parent company, the Los Angeles real estate developer Castle & Cooke Inc. When the mortgage unit was created in 2005, he said, it took six weeks to close a loan. So Mr. Pineda, a veteran of PlainsCapital Corp. and McAfee Mortgage Co., bought imaging software from Del Mar DataTrac Inc. of San Diego.
"The technology facilitated the business plan, but it's expensive, and paperless technology is intimidating," Mr. Pineda said. "In a poorly capitalized industry, the last thing other correspondents want to do is invest in technology."