A Creative LOS

*A Creative LOS*
**By Tony Garritano**

TonyG***I know the words “creative” and “LOS” don’t always go together. However, the opportunistic LOS today is doing more to get the attention of lenders, offer them real value and keep them from looking elsewhere. For example, I recently had a call with my friend Scott Stein at Xetus. They’ve got a lot of new things going on over there that I think are worthy of sharing with you. Here’s the scoop:

****Xetus closed 2012 with a 136 percent increase in revenue over 2011 and anticipates continuation of upward growth through 2013, as it actively expands its engineering and support personnel and promotes its XetusOne Loan Management Platform—including two new applications featuring subordination request and line of credit (LOC) renewal web portals. With one top ten financial institution already deploying XetusOne’s newest applications, Xetus also posted a Q4 2012 increase in earnings of 140 percent year-over-year and expanded its office space four fold by relocating its headquarters to Santa Clara, Calif., to keep pace with demand for the expanding suite of XetusOne Loan Management Platform Applications.

****President and Chief Executive Officer Scott Stein says Xetus’ growth reflects the company’s acute understanding of mortgage industry movements. “Faced with the industry trend of mergers and acquisitions of recent years as well as a rising tide of LOC maturity dates, lenders must seek tools that promote profitability and offer sound underwriting without compromising customer service,” he says. “XetusOne’s subordination portal accelerates the approval process without compromising underwriting standards, while the LOC renewal portal provides a reliable tool to initiate and handle renewals without alienating customers and risking flight to competitors. Both applications offer sure, competitive advantages.”

****XetusOne’s modern, web-based architecture already provides for management of a loan’s life cycle. But with its paperless workflow wrapped around the new capabilities of the subordination request and LOC web portals, XetusOne continues to deepen servicers’ ability to step beyond traditional loan origination to specialized services that optimize returns. Stein says XetusOne’s streamlined technology applies to the full life of a loan and gives users a unique framework to efficiently handle each stage, whether from a compliance, customer retention, risk analysis, or profitability standpoint. “In 2012, we focused on transferring the same efficient, intuitive interface that our clients already use in origination and modifications to other loan-lifecycle touch points, such as subordinations and maturing lines of credit.”

****Lenders can use XetusOne’s private-labeled subordination request portal to reduce second-lien risk while upholding, if not tightening, underwriting scrutiny, all without placing additional burden on their IT or operations personnel. “The application removes inefficiencies buried in lenders’ subordination approval processes, reducing costs and making them more competitive,” says Stein. “Ultimately, it sets up a profit-generating opportunity because lenders can deliver quick turnarounds on requests without compromising risk analysis and fiduciary responsibility.”

****In the case of one top ten financial institution, deploying the subordination request portal allowed the organization to promptly handle an influx of requests resulting from the acquisition of another bank. XetusOne replaced a previously paper-intensive process with a common, centralized database, around which the subordination requestor, processors, and underwriters could easily collaborate. Through pipeline transparency, a requestor can track the progress of the request and communicate directly with the processor, thus enabling the same number of staff to efficiently handle requests that tripled in volume.

****Also, using XetusOne’s LOC renewal portal, lenders can engage existing LOC customers and increase customer retention. The consumer-driven, automated system takes care of every aspect—from verifying ability to pay and satisfying all compliance requirements to collecting all other data required to make a renewal decision. Customers require only Internet access and a standard web browser to submit a request to renew their line of credit. To conclude the process, customers sign a standard modification agreement and retain the same account number and checks for their credit line—the ultimate hassle-free customer experience.

****Financial institutions that deploy XetusOne’s LOC renewal portal can optimize the ongoing return on LOCs from candidates that do qualify for renewal as well as avoid costly write-offs of bad debt through the early identification and segmentation of line of credit holders who may need assistance in repaying their balance at the end of the draw term. During 2012, one Xetus client that deployed the new LOC renewal portal handled close to 30,000 LOCs through the portal and expects to handle another 50,000 during 2013 —all with a staff of only six dedicated LOC Maturity Team members.

****In fact, the automated handling of LOC renewals, an application unique to XetusOne, is timely, considering the flood of LOCs that will soon reach maturity. According to the OCC, in 2012 roughly $11 billion in LOCs reached the end-of-draw period, and by 2014 the amount will nearly triple to $29 billion and in 2015 skyrocket to $53 billion. “Many companies are struggling to handle maturing LOCs and are simply shutting down their LOCs and forcing customers to reapply, which has significant, negative ramifications on both customer retention and bank revenues,” says Stein. “XetusOne offers the ability to easily renew an existing LOC for a good customer, in full compliance with new regulations and with minimal interruption to all parties.”