Ocwen's Homeward Unit to Use Ellie Mae Correspondent Investor Tech

Homeward Capital will become the third mortgage investor to implement Ellie Mae's Total Quality Loan program, a technology and services offering that provides tamper-proof versions of borrower verification data on loans sold by correspondent lenders.

CEO Sig Anderman announced the agreement during an Aug. 1 conference call to discuss the Pleasanton, Calif.-based mortgage technology vendor's second-quarter 2013 earnings. It was during Ellie Mae's 2Q12 earnings call a year ago that the company said CitiMortgage would become the second investor to pilot the TQL initiative. Wells Fargo's correspondent lending division was the first to sign onto the program in October 2011.

"As with the other two participating TQL investors, Homeward was drawn to TQL in order to reduce risk, speed turn times and lower costs," Anderman said on the call. "The impact of the Total Quality Loan process continues to be compelling not just for investors, but for our lenders as well. Regardless of who they're selling loans to, lenders using TQL are seeing fewer conditions being placed on their loans by the investors buying their loans."

Ellie Mae reported net income of $3.7 million off total revenue of $34.3 million for the second quarter, up from net income of $5 million and total revenue of $23.6 million, a year ago.

The TQL service eliminates investors’ need to order duplicate third-party reviews of loan files or go to each individual service provider for a secure original copy of borrower verification services. Ellie Mae says the service reduces the cost of compliance reviews for investors because all the information is in the same place and cuts down on the added expense of purchasing additional verifications.

Ellie Mae is on pace to generate approximately $5 million in annual revenue from offering the TQL service, COO Jonathan Corr said on the call. As with the Wells and Citi, Homeward will begin with a pilot program, before adopting more widespread use.

"Our expectations is that's something we lay the groundwork for this year, but really we start to see real revenue benefit and adoption as we go into 2014," Corr said of Homeward's participation.

The TQL program builds on Ellie Mae technology that serves as a communication medium and delivery channel of third-party underwriting services like document preparation, income and employment verification, and credit checks. When participating lenders order verification services over the Ellie Mae Network, Ellie Mae will hold a copy of that data in a secure server, in addition to delivering it to the lender’s Encompass loan origination system. When an investor or aggregator is reviewing the loan, it can access that first generation verification data with assurance the lender didn’t tamper the data.

Mortgage servicing and asset management firm Ocwen Financial announced its $750 million acquisition of Dallas-based Homeward Capital from private equity firm WL Ross & Co. in October 2012. The deal, which closed in December, helped Atlanta-based Ocwen enter the mortgage origination business and grow into a top 10 servicer, with more than $258.5 billion in servicing volume, according to MortgageStats.com's first quarter 2013 data. Ocwen ranked 11th in correspondent originations for 1Q13, with $2.3 billion in volume.