HR Block 2005 Annual Report Download - page 21

Positioning for the Future >>>
The mortgage lending environment changed
dramatically this year. What is Option One doing to
maintain its position?
Today’s more competitive landscape has
inspired us to find better, more creative ways to
serve our customers and manage costs.
This year, we lowered our cost of origination while
increasing our loan production 33 percent to $31
billion. We achieved these results while still investing
in technology, infrastructure and marketing. We can
continue to lower costs by leveraging technology.
And by realigning our business to focus on sales and
production, we can take advantage of standardized
processes and capture additional savings.
Although the way we originate loans is personalized
to each customer, how we set up, underwrite and
close the loans is similar. We are streamlining those
processes to drive our costs lower, and as we continue
to improve our processes, we can be even more
competitive — and that becomes an advantage for us
in the market. We’re well positioned and have the
momentum to meet the challenges of a changing
mortgage lending environment.
Why did Option One increase its account
executives in light of a more competitive market?
Increasing the number of account executives
was integral to achieving record loan volumes, as we
did in the fourth quarter. Our new sales associates
have allowed us to enter markets that are currently
not served or underserved. They also enabled us to
increase by more than 2,000 the number of active
mortgage brokers who work with Option One.
Our sales force is one of the most experienced and
knowledgeable in the industry, which is a key
reason loan originators choose to work with a
particular lender. Option One ranks high in other
areas, too, such as providing reliable preapprovals
and dependable turn times, and responding promptly
to broker inquiries. Because our turnover is low, our
sales force builds on that knowledge each year,
maintaining our high levels of service even as we
add new sales associates.
Why did you increase the number of active
mortgage brokers licensed to work with Option One?
In the wholesale business, mortgage brokers are
our customers. By establishing new and profitable
relationships with brokers who appreciate our
relationship-based approach, we’re able to grow our
business. Our goal is to increase our broker base
and the amount of business we do with them.
What do you mean when you say Option One
wants to be the “high-tech, high-touch” provider of
mortgage products and services?
We see high-tech and high-touch going hand in
hand. Being high-tech means we can offer online
access to loan prequalification and automated
underwriting tools to provide loans faster and more
efficiently. At the same time, those efficiencies
streamline our processes and free our associates to
spend more time with our customers in a consultative
role. Such customer focus has fueled our growth
and is the key to our success. Our future lies in
integrating technology smoothly, while maintaining
our reputation as the industry’s “high-touch” lender.
Does potential volatility in secondary markets
worry you?
Option One is well prepared for many secondary
market scenarios. Our preparation starts with an
experienced leadership team, which proved they could
manage deftly through the market volatility of the
1990s. If we were to face a market of lower investor
demand, we could continue to fund loans because we
maintain warehouse credit facilities of three to four
times’ monthly production. We also meet regularly
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FAIR LENDING BEST PRACTICES
Our open and fair approach to
lending helps people achieve the
dream of home ow nership or use
their home equity to improve
their lives.
>We make loans only w hen there is
a benefit to the borrower.
>We lend to all borrow ers who
qualify, and we comply fully w ith
the Real Estate Settlement
Procedures Act, the Truth in
Lending Act, the Fair Credit
Reporting Act, the Fair Housing
Act and the Equal Credit
Opportunity Act.
>We offer customers the low est
interest rate and best product
they qualify for in the channel in
w hich they apply.
>We do not offer loans that
contain single premium credit
insurance, or loans defined as
high-cost mortgages under
federal or state laws.
>We alw ays consider the borrow er’s
ability to repay the loan.
>We allow borrowers the choice
of a loan w ith or w ithout a
prepayment penalty. Loans w ith
prepayment penalties come w ith
a low er rate and/or fee.
>We encourage our customers to
apply for escrow accounts.
>We make every attempt to keep
customers in their homes.
Foreclosure is a last option, used
only w hen other alternatives have
been exhausted.
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Opt ion One