IBM expands mortgage product offering
Charlotte Business Journal
IBM Corp. is expanding the services it offers to lenders.
The company’s Charlotte subsidiary, IBM Lender Business Process Services Inc., provides loan processing and closing services to lenders looking to reduce costs. The business unit allows lenders to outsource the processing, underwriting and closing of mortgage loans.
This week IBM expanded its offerings, including the ability to service Federal Housing Administration (FHA) loans. IBM executive director Greg Sullins says the FHA product is a direct response to market conditions and feedback the company received in recent months from clients.
“There’s a growing need for FHA fulfillment capabilities following the demise of the subprime industry,” he says. “It’s a growth opportunity for IBM.”
The subsidiary was formed in late 2006 and announced in early 2007, with Charlotte as its headquarters. Of the group’s 250 employees, 68 are based here, with others in Missouri, New Jersey and California. The business group hopes to add up to 600 Charlotte jobs over the next few years.
By outsourcing with IBM, banks and lenders can structure their processing costs to pay on a per-loan basis and save expenses when mortgage volume declines.
Sullins says the IBM unit can help banks, thrifts and credit unions of all sizes. Small lenders simply can’t afford the costs of independent loan-processing infrastructure, and midsized lenders with mortgage-origination volume up to $50 million a year are also interested in outsourcing their back-office operations. IBM already provides services to large mortgage lenders, and they may be interested in outsourcing the processing of certain products, channels or geographic areas, Sullins says.
In addition to its new FHA services, IBM also offers individual components of the loan origination process such as quality assurance and fraud-protection services.
“There’s an end-to-end origination process that we can now take apart and provide just certain pieces to the lender,” Sullins says. “This allows us to offer a menu of services for clients. It’s not just a one size fits all product.”
IBM increased its mortgage capabilities in 2006 when it purchased Palisades Technology Partners, a company that provides mortgage-origination software, and FileNet, a software company that helps businesses manage their content and processes.
North Carolina-based Coastal Federal Credit Union became one of the unit’s first customers in May. The credit union expected to save 30 percent to 40 percent in mortgage-origination costs.
New York-based IBM (NYSE:IBM) has a total of 1,750 employees in Charlotte and more than 15,000 in North Carolina.
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