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The second rethinking of the company's IT strategy involves the transportation of that data, in particular an effort to drive the loan-approval decision closer to the point of entryin other words, in the individual mortgage broker's officeand farther from the point of internal review.
That would eliminate as much paper as possible. The company is exploring the use of electronic signatures and electronic documentary evidence, including such simple ideas as a tool set that allows brokers to simply scan your paycheck or tax return and deliver it to headquarters electronically.
"A substantial amount of our operational costs come during the verification process," says Ryan. If NovaStar can speed up the process, it will not only be able to eliminate part of the cost component, but it should ultimately close more business. Ryan and her team are targeting a minimum of 20 percent operational improvement through such initiatives.
That would translate to a $41 million annual reduction in operating expenses in NovaStar's wholesale mortgage origination business.
The third aspect of Ryan's overhaul of NovaStar's IT strategy will be focused on its most visible part: the mortgage application software itself. Almost all of the company's broker applications have been developed in-house, and were designed with three primary objectivesefficiency, speed and quality.
While the company is proud of those applicationsNovaStar was one of the first to offer an instantaneous automated approval process for sub-prime loansit has also identified 5 of its 15 core applications for overhaul or complete replacement. "The key will be to make sure we don't blow up the business in the process," says Ryan.
Ask Lance Anderson, president and cofounder of NovaStar, what separates the company from the competition, and he will readily admit that it's not the company's products themselves. It's that in mortgages, operational efficiency wins the day.
"As a lender, the lower we can keep our own costs, the lower the rates we can offer our customers," he explains. "With the right IT strategy, we can not only keep our back-office costs down, but we can give brokers quicker turn times as well. That's how you stand out from the competition."
Duff Mcdonald is a freelance writer living in New York.