At Colonial Savings in Fort Worth, Texas, mortgage processing is king.
The bank with roughly $1 billion in assets, a $21 billion servicing portfolio and 24 branches has gone from originating about 600 loans, on average, a month (in the middle of the last decade) to processing paperwork for roughly 5,000 home loans within that same 30 days.
The financial services company now not only buys up loans from Fannie Mae and Freddie Mac, it also works with more than 1,000 credit unions to handle their mortgages.
The jump has been daunting, explains Mike Ciabattari, president of content management system vendor IDT.
"Oh my gosh, and we're talking about files that are between 300 and 500 pages per mortgage," he says, adding that with regulatory scrutiny the documents are only getting more complex. "We're talking about a ton of paper, millions of pages being scanned per month upwards of two million pages."
The system has pushed Colonial Savings, specifically a division within the servicer of between 18 to 25 people who handle mortgage paperwork, to the max.
Ciabattari breaks it down:
In 2005, IDT, a tiny tech company outside of Chicago, with a majority of its customers in healthcare, higher education and manufacturing, took over Colonial Savings image processing from another service provider.
IDT currently has four bank customers. It acquired its first in 2001.
To put it in context, IDT's business with Colonial Savings started ratcheting up in 2009 when interest rates were starting to approach zero.
However, as a result, investors in the bank wanted to see more granular aspects of the loans.
In the past, Colonial Savings had a system that required a tiny department of paper pushers to place separation sheets between each section of the loan.
A credit document. Separation sheet. A tax document. Separation sheet. You get the idea.
"It's 20-plus people that are doing [mortgage processing], and [Colonial Savings] would often have contingents of temporary workers as volume would spike," Ciabattari says.
"They would be running for 16 hours a day." (A spokeswoman for the bank, Janet Walter, says the temps worked in two shifts of eight hours each.)
Understand that there were 20 to 25 such document types. At the time, Colonial Savings' backers wanted to see roughly 170.
The tactic, no doubt, was meant to push the bank to create more accountability and to better deal with each one of those loans.
As a result in 2010, IDT switched Colonial Savings' content management system to one that required less rigorous scripting and coding and gave the bank a piece of AnyDoc software that reads all the contents of a loan and then separates all the different document types out.
Bank employees than validate those document types.
It's all much simpler.
By the end of 2011, Colonial Savings had made all the upgrades. And the bank was saving cash without cutting its most elastic cost employees.
Currently, IDT is working with Colonial Savings to move parts of the bank's mortgage document scanning to its branches.
The change, the bank estimates, will eliminate $30,000 in shipping costs a month.
That should be done by the end of next year.