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Case Studies
FINANCIAL SERVICES – MORTGAGES
Loan Adjustments
An asset acquisition firm acquired 2.7 million loans in a one-year period. The mortgages, which were acquired from lenders in order to create pools for mortgage-backed securities or to convert to cash, required adjustments in .2% of all transactions. Utilizing process maps, FMEA, ANOVA, regression and process control systems, the firm was able to improve its system reports to provide more relevant, timely and accurate data. The adjustment process was also automated, and lenders were trained to provide more complete and accurate information. There was significant improvement in lender satisfaction, and $133,000 in savings was obtained because of Six Sigma.
Investors’ Analysis Publication
Significant errors in a monthly publication for Wall Street investors and traders were causing client dissatisfaction and significant lost revenue. The publication, which provides pool analysis of Adjustable Rate Mortgage (ARM) and Trading Factors, has a system that holds back pools from being published with first-time informational errors. Still, an average of 41 pools (0.2%) containing errors were getting published each month. A rigorously focused Six Sigma project applied process maps, measurement system analysis, hypothesis testing and process control systems. As a result, several system upgrades and work methods were changed to flag leading indicators for potentially "held back" mortgage pools. Management systems were also changed to track performance and drive accountability. Correction of reporting and accounting errors led to $1.2 million in recovered revenue.
Customer Service Outages
A retail mortgage lender was experiencing significant service disruptions due to its interface with automated origination and underwriting systems. Monthly outages to external customers using Desktop Originator and Desktop Underwriter were averaging 10,400 hours (time to restore service multiplied by users affected), causing customer dissatisfaction and consumption of held desk technicians’ time. Application of process maps, measurement system analyses, chi-square and correlation analyses led to system hardware enhancements that improved connectivity, software enhancements to eliminate user errors, and a user education program that helped avoid system outages. In addition to a positive impact on customer satisfaction and retention, there was an $80,000 savings in internal costs due to Six Sigma implementation.
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