Automation is the foundation of Flagstar Bank.
The Michigan lender - a pioneer of sophisticated video conferencing - is now embellishing its behind-the-scenes technology.
With the move, Flagstar hopes to attain something akin to the Holy Grail of mortgage lending: a processing system that seamlessly links origination, pipeline, and other functions.
Right now, most lenders use different systems for each process, duplicating efforts and clouding communication among departments.
But Flagstar is looking to Fitech Systems, a well-known name among mortgage lenders, to supply a cohesive system through a workflow approach that lets departments communicate.
Flagstar believes the new processing system will complement the company's use of PC-based video conferences to hook up the bank's underwriters with brokers and borrowers.
The company will not disclose how much it is paying for the hardware and software system, aside from saying the cost is considerable and includes a good deal of consulting services.
Flagstar is putting a lot at stake: The company originates more than $5 billion of loans annually through its own centers and outside banks and brokers. Problems would have a significant, if not permanent, impact on the company's reputation.
Flagstar is confident it is making the right move with the right partner: Fitech.
"We talked to existing Fitech customers and came away very positive," said Paul J. Orlando, who is heading the project for Flagstar Bank. "There is a lot to be gained by doing this. We will wrap as much as we can into one system."
Mr. Orlando said that after implementation, Flagstar will be one of the first banks operating with a system that coordinates prequalification, origination, closing, secondary marketing, and pipeline management, among other functions.
The system, dubbed Bravura, will direct work internally to different users, making the overall company more effective, Mr. Orlando said.
Flagstar will deploy the process over "a wide-area network" - its Bloomfield Hills headquarters and all 28 of its regional lending centers in Indiana, Michigan, and Ohio. Additionally, the system has the ability to link - on a limited basis - with several thousand banks with which Flagstar conducts correspondent business.
Bravura also will connect Flagstar with outsiders such as Fannie Mae, Freddie Mac, appraisers, insurers, and others that play a role in mortgage transactions.
The system will replace a DOS approach with a GUI-based 32-bit Windows NT approach that is said to be one of the more sophisticated on the market. But for all the Flagstar must be diligent, industry observers said.
"It's not as simple as just installing one system to replace another system," said George Kivel, an analyst with Tower Group, a technology consulting firm in Boston.
"They have to determine the organization's ability to leverage that system," Flagstar's Mr. Orlando said.
A "solid" partnership with its vendor is necessary to ensure that "the value of the software is delivered to the bank, instead of just promises," Mr. Orlando said.
Indeed, "system support was an important consideration for us in making the decision," he said. "We needed someone with the background and experience to support us and our strategic objectives."
Flagstar is working with the Greensboro, N.C., lending division of Fitech Systems, a provider of software applications and consulting services to more than 150 financial institutions.
Flagstar believes Fitech has incorporated the industry's best applications in each area, such as underwriting and property appraisal, Mr. Orlando said.
The Fitech system will supply Flagstar with "the tools necessary to compete and serve the needs of customers," said Charles E. Welsh, vice president with Fitech.
"Our definition of those tools is based on proven, widely used technologies, like Windows," Mr. Welsh said.
Flagstar is conducting a three-month analysis that involves auditing all parts of the bank's lending operations. To map out a workable approach, the bank and Fitech will apply the new system according to information that the audit turns up.
Beta testing will begin in May, and a final conversion is set for September, Mr. Orlando said.
The application is aimed at keeping Flagstar on the cutting edge, a position the bank relishes.
Flagstar is the industry's largest user of video conferences for originations and continues tweaking that system to keep its edge, said Michael Hillman, the vice president who oversees this operation for the bank.
The company late last year eliminated a requirement that borrowers be present at video conferences between brokers and underwriters - and as a result, volume has doubled, to about 175 conferences a week, Mr. Hillman said.
Before the change, arranging the inclusive conferences was hampered by borrowers' reluctance to be present because of anxiety about the process and by scheduling conflicts due to borrowers' work schedules.
The change has allowed Flagstar to improve its speed in delivering approvals to brokers, because there are fewer delays in communication, Mr. Hillman said.
Right now, about 500 of the banks' 4,000 correspondents use the video system, and more are signing up, Mr. Hillman said.
Lenders "like the idea of bringing the loan decision directly to the application table," he said.