A Chicago-based nonprofit organization is using DocuWare to simplify its lending processes by utilizing electronic workflow and the ability to store information in a central repository, accessible to multiple office locations. DocuWare helped the organization comply with Federal fair housing laws and improve its loan closing rate and cash flow.
Initial Situation
Established in 1975, Neighborhood Housing Services of Chicago (NHS) is a nonprofit neighborhood revitalization organization committed to creating opportunities for people to live in affordable homes, improve their lives and strengthen their neighborhoods. NHS works in eight neighborhood-based offices in and around Chicago offering home ownership, lending, and rehab services. Through partnerships with residents, block clubs, financial institutions, insurance companies and others, NHS has served more than 182,000 families, loaned $495 million to borrowers to buy, fix or keep more than 29,000 dwelling units. They have educated more than 28,000 potential new home buyers and built or rehabbed more than 600 affordable homes.
NHS’ lending unit needed a better way to manage loan applications and related documentation. The organization’s loan processes are very complex because in order to make home ownership affordable to their clients, each property has between three and five different loans or grants. Multiple loans on the same property need to be linked to each other and to the supporting personal finance documentation.
NHS councilors and loan officers work with families to approve them for a mortgage through their home ownership program. Once four pieces of information are submitted to NHS, the federal government considers it an active application and by law an approval or decline decision must be made within 30 days. With eight different offices and loan officers in the field, physically gathering and bringing all the needed documentation to the corporate office for processing slowed the entire process and made it hard for NHS to be in compliance with the Federal fair lending laws including the Equal Credit Opportunity Act ( ECOA), the Fair Housing Act (FHA) and the Home Mortgage Disclosure Act ( HMDA.. Slow loan processes and closing rates also affected NHS’ ability to resell the loans and improve their cash flow.
Requirements
NHS wanted a document management solution to help them centralize data storage and create an electronic workflow to speed loan processing. They needed a program that could be integrated with their loan origination software, Encompass, and have the ability to directly transmit financial information and loan documents to their bank. NHS was ready to invest in software that was designed for document management archiving and workflow. It was time to stop just getting by with what they had.
Solution
NHS’s new Chief Information Officer, Jose Ortiz, needed access to real time information about loans in process. He saw the benefit DocuWare could bring to NHS and pushed for implementation within 90 days. Today NHS is processing loans via an electronic workflow. A Lanier LD550cSPF MFP was installed at each neighborhood office and along with other stand alone scanners NHS already owned, they can now capture documentation electronically. Loan officers in the field can now stop by their nearest branch office to scan and index documents, providing the corporate office with immediate access to documentation. This eliminates delays in sharing information and helps the organization comply with the 30 day time limit to process a mortgage application as stated in the Federal fair lending laws. With electronic workflow in place, moving loans through the underwriting process flows smoothly and can now be tracked for how many days the loan has been ‘in process’. Loan documentation originals are still stored in a physical file, as required by law, but loan processing is done electronically, reducing errors and streamlining the process.
Ease- of-use Benefits
After processing their first loan using electronic workflow, NHS could see immediate benefits. One of the organization’s biggest hurdles was the delay in getting financial documents such as W2 forms to the corporate office for processing. Loan councilors can now scan and share information quickly. Everything is available from every office, including the 200-page loan origination packet. Additional forms created in Encompass can be stored directly in DocuWare as well. NHS streamlined their document collection process by giving employees the mobility to submit information at any office. Financial documents can be linked to multiple loans, reducing errors and simplifying record management especially when accessing information.
Implementing DocuWare has allowed NHS to strengthen the security of its client’s financial information by allowing NHS to board, or transferring loan and mortgage documents to a financial institution electronically.
Ortiz, says, “In addition to substantial time savings and meeting Federal fair lending laws, we can now be sure of providing a secure exchange of sensitive information with financial institutions. Electronic boarding reduces errors and delays and helps us meet closing dates and smoothes the final stage of the process.”
NHS has also eliminated quality control bottle necks, by electronically auditing every forth loan file. With electronic workflows in place it is much easier for NHS to see every step in the process and be sure things are processed correctly.
Compliance Benefits
Today, real-time information is accessible to the CFO. NHS developed a report that queries their database to show where every loan is in the process and how close it is to the 30 day- response window motivating the staff to push the loan through the process and make calls for any needed documentation. NHS is now empowered with the ability to monitor and track their compliance with Federal fair lending laws, limiting their exposure to legal and punitive actions.
Financial Benefits
For NHS and other similar organizations, lending is the primary income generator and the speed at which loans are processed directly impacts the organization’s solvency. NHS earns fees from closing cost, but generates the majority of its income by bundling loans and selling them to investors for a premium. To accomplish loan sales, NHS must amass 120 to 150 loans or $3 to $5 million in loans before the loan bundle can be re-sold so that they can continue to loan money.
“Our closing rate has a huge impact on our cash flow. With DocuWare in place we have a much better sense of where each loan is in the process. The faster we close loans the sooner we are able to re-sell them and bring in new funds allowing us to continue our work in our communities,” concludes Ortiz.
