Srta

Case Study

Case Study:

Improving Customer Satisfaction and
Investor Confidence in Mortgage Banking

May, 2003

Six Sigma Qualtec

May, 2003

Improving Customer Satisfaction and Investor Confidence in Mortgage Banking

Case Study:

Improving Customer Satisfaction and
Investor Confidence in Mortgage Banking
© 2003, Six Sigma Qualtec

Challenge:
A leading mortgage bankingfirm whose clientele includes many borrowers who have been disqualified from
traditional loan sources wanted to improve customer satisfaction and increase investor confidence.

Solution:
In addition to establishing a CRM initiative, the firm introduced Six Sigma quality into key business
processes through targeted training of in-house Six Sigma experts to lead critical process redesignprojects,
which not only addressed customer and investor issues, but also produced significant and unsought
increases in revenue and reductions in costs.

Results:
Improved customer satisfaction and boosted investor confidence by:
• Improving customer response time by 350%
• Increasing loan retention by 20%
• Reducing abandoned call rates from 12% to 4%
• Eliminating process redundancies by 66%• Eliminating $21 million in risk exposure
A mortgage banking firm involved in the origination, purchase, sale, and servicing of residential mortgage
loans to borrowers with hard-to-document income or imperfect credit histories has experienced exponential
growth over the past several years. With more than 3,500 employees nationwide and a national network of
15,000 brokers, the company fundedalmost $15 billion in mortgages in 2002 and services a portfolio of
$28 billion. Because the home loan business grows more competitive almost daily, the company wanted to
improve its customer service. Because of the risks involved in the nature of its loans, it also wanted to
increase investor confidence.
To help implement the improvements that they were seeking, the company turned to Six SigmaQualtec for
the training of selected personnel to lead more than two dozen improvement projects in critical back office
business processes. Initially, the effort targeted customer satisfaction and investor confidence. Individual
projects designed to boost investor confidence included better management of high risk foreclosures, an

Copyright © 2003, Six Sigma Qualtec. All rights reserved.

1May, 2003

Improving Customer Satisfaction and Investor Confidence in Mortgage Banking

improved correspondence process, reduced process redundancies, expanded loan numbers, and a reduction
in loan modifications. Projects designed to increase customer satisfaction included improved loan retention,
reduced abandoned call rate, and reduced cycle time for reinstatement.
Trained in SixSigma techniques, company participants in the program were able to immediately begin
documenting the business process for which they were responsible and to develop and establish metrics
and determine contingency plans in the event of process failure. As training continued, they were able to
analyze the capabilities of processes in increasingly precise and scientific terms and redesign theprocesses
for optimal performance. The initial results were so encouraging, that the training was expanded from back
office operations to additional departments. Moreover, because substantial financial benefits began to materialize – which had not been an objective of the original plan –s project managers began to factor in savings
from the reduced cost of poor quality (COPQ) as they designedprojects.
Results from the projects aimed at investor confidence have been impressive. The company improved its
ability to identify high-risk loans and consequently its ability to manage them. Improved handling of
property claims for holdings in foreclosure reduced investor loss and increased satisfaction. The elimination
of redundant loan processes resulted in an annual savings of $315,000. An...