HR Block 2005 Annual Report Download - page 22

with many of our investors, including the two largest
— Fannie Mae and Freddie Mac — to maintain our
strong liquidity position. Additionally, our ability to
sell our mortgages as whole loans or securities
provides us with increased flexibility and liquidity in
difficult times.
Although we recognize there may be periodic market
disruptions, we don’t think it’s realistic to think the
secondary market would simply stop buying loans.
In fact, the asset-backed securities market has
experienced tremendous growth, with non-prime
mortgage loans now making up $400 billion, or
approximately 47 percent, of the total market. While
investors always seek quality companies, it becomes a
higher priority in more challenging markets, which is
a plus for companies like Option One that have a long
and consistent track record of doing the right thing.
How have you ensured your continued financial
health if more borrowers become unable to repay
their loans?
When we securitize or sell loans to investors, we
keep only the residuals and the right to service
those mortgages on our balance sheet. So our financial
risk becomes limited to that extent. Investors know
our servicing team is one of the industry’s best,
which is a key reason why they often put a premium
on our loans.
This division is very focused on working with
borrowers to find solutions to keep them in their
homes. Option One also has received the highest
non-prime servicer ratings from Standard & Poor’s,
Moody’s Investors Service and Fitch Ratings.
These independent rating agencies base their
ratings on loan performance, quality and service of
operations, and the experience of the management
team. While we can never predict the future, if a
worst-case scenario developed and more borrowers
became unable to repay their loans, we are confident
that we have appropriate staffing and the expertise
to manage the issue.
What differentiates the Option One brand from
other non-prime residential lenders?
We initiated a brand campaign last year, which
included new advertising and a new tagline — “One
Gets It Done.” Our strength, and what differentiates
us from other mortgage lenders, is our reputation
for service. That reputation is based on our core
values and embodied by the people who work for us.
We empower our people to do what’s necessary to
deliver superior customer service and create a level
of trust, which is why our customers know we’ll
deliver on our promise. We don’t want to simply
meet expectations — we aim much higher.
By surveying our clients twice a year, we are able to
identify where our service excelled and where we
can improve. This client feedback ensures that we
continue to deliver on our brand promise of being a
company that loan originators can trust to get the
job done.
What new opportunities do you see in the future
for Option One?
Entering new markets and developing innovative
new products present opportunities for us to grow
originations. As we expand our current product
menu, we can meet the needs of a broader range of
customers than we were previously able to serve.
We’re also identifying ways to deliver loans better
and faster to meet the needs of our customers. For
example, being able to offer our products to customers
who are comfortable doing business online is an
untapped and growing area of opportunity for us.
And as demographics change, we have opportunities
to serve the needs of new, or emerging, groups of
customers who want to participate in the dream of
home ownership, although they may not meet the
guidelines of traditional lenders. As we broaden our
portfolio of products, services and methods of delivery,
we can meet the needs of more diverse customers
and capture new opportunities to grow our business.
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BROKER PREFERENCES
Option One consistently received
a top five score from mortgage
brokers rating the characteristics
most valued in lenders:
>Sales representative returns phone
calls
>Reliable preapprovals
>Dependable turn times
>Know ledgeable sales represen-
tatives
Survey conducted by Campbell
Communications and sponsored
by Inside Mortgage Finance
Publications.
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Opt ion One