From Main Street to Wall Street Internet Speed: Integrating the mortgage supply chain is vital to reducing cycle time, improving customer service.(Electronic Partner Networks )

Electronic Partner Networks (EPNs) offer a partial solution. But what happens after you get the appraisal back faster?

Despite two decades of loan-production automation efforts, origination costs remain too high. Even now, only a few of the largest lenders have been able to move beyond functional automation to achieve dramatic improvements in production efficiency.

The current focus on streamlining the disjointed process of ordering mortgage services is a case in point. Electronic Partner Networks (EPNs) and bundling services are part of the solution. Yet why stop at getting appraisals faster when what counts is what you do with the data after you get the appraisal? In some cases, appraisal data might require the lender to inform the borrower that a different loan program might be appropriate. Without tight and synchronized communication, such a scenario could delay the closing. The secret to efficient production and bottom-line results is tightly integrating and synchronizing the loan production process with channel and supplier trading partners.

In many ways, lenders operate in a business environment comparable to manufacturers of finished, durable goods. Lenders transform the raw material of investor-supplied capital into residential mortgages. They work with a diverse array of suppliers for real estate-related information services, including credit reports, flood determinations, title insurance, appraisals, documents, settlement and fraud detection services. Together with borrowers, investors, brokers and realtors, these service providers constitute a supply chain as complex and sophisticated as anything found in commercial product manufacturing.

The engines that drive financial services supply chains include Wall Street firms, banks, mortgage originators and brokers that initiate most financial transactions. As competition for business intensifies, these institutions come under increasing pressure to offer more attractive consumer products at the lowest possible price with the best possible service. Like manufacturers, their financial success depends in large measure on their ability to procure, integrate and synchronize materials and services from business partners in the supply chain faster and at less cost than their competitors.

Today, business interactions with partners in the mortgage supply chain are increasingly conducted electronically. To work effectively, supply chain partners need greater visibility into each other's operations and greater connectivity with each other's information and transaction processing systems. The entire supply chain becomes one extended electronic enterprise (which we call E3), in which each participant has an increasing stake in the success of its trading partners.

Here are a few lessons our organization has learned over the past two decades automating the loan production process with our lender clients.