IBM Announces Formation of New Loan Fulfillment Services Company

Will Provide Outsourced, Variable-Cost Mortgage Origination Services

ARMONK, NY - 26 Mar 2007: IBM (NYSE: IBM) today announced the formation of a new business unit, which will specialize in mortgage origination services.

IBM Lender Business Process Services, Inc. (LBPS), a wholly owned subsidiary, will enable mortgage lenders to replace the fixed costs associated with typical loan fulfillment operations with a variable cost framework, freeing up lenders to focus more on providing better personal service and support to consumers.

The new unit will offer a full range of lending services, including loan application, underwriting, processing, vendor management, document preparation and loan closing.

LBPS will provide top tier lenders an opportunity to utilize leading edge technology and processes much more economically. For others, especially mid-size and smaller lenders, LBPS will provide an opportunity to tap into a superior capability that otherwise would be too costly to develop and maintain. In addition, LBPS will enable new entrants to the mortgage market to improve focus on their brands, products, business rules, and customer experience while benefiting from LBPS' scale and process expertise.

By delivering automated solutions based on open standards and Service Oriented Architecture (SOA), the new unit will help U.S. lenders achieve improved back-office efficiencies in a highly cyclical industry.

"There is a fundamental shift in how the mortgage industry uses technology and automation to achieve the kinds of efficiencies required to thrive in the new lending economy," says Af Assur, general manager, IBM Mortgage Origination. "Lenders need a partner like IBM who can invest to automate the total loan fulfillment supply chain on their behalf, to give them the competitive advantage they need. By integrating fulfillment and imaging technologies, proven processes and highly experienced lending professionals, we will deliver the automation and digitization necessary to help achieve the loan fulfillment efficiencies and service required for success."

The cyclical mortgage market is placing mortgage lenders under pressure to manage an inherently high-cost, labor-intensive process. Lenders are challenged to achieve scale in a fixed cost structure environment that adversely impacts lender profits as the housing and interest rate markets fluctuate. In addition to delivering fast and flexible mortgage products tailored to their customers' individual needs, lenders must also ensure that their loans are correctly priced, include only the appropriate fees, generate all required documents and fund within a timely manner. Lenders must also still remain competitive within the context of a rapidly changing and more stringent regulatory environment.

Leveraging Technology, Process and People to Drive Value

IBM has invested in the expertise, processes and technology to deliver automated, standardized processes for the lending industry:

IBM has been steadily building on its existing capabilities through strategic acquisitions and blending of software and services to help its banking and lending customers worldwide tackle their pain points. IBM is uniquely positioned to deliver on this solution because of its focus on and competence in the financial services industry, one of IBM's core industries.

IBM Lender Business Process Services, Inc., "The Loan Fulfillment Advantage" is based in Charlotte, NC.

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