Discovering and Improving ProcessesReal World Example: Processing Home Loan Modification Requests

A Jump-Start on BPMN ModellingBPMN is the standard for business process modeling, but business analysts are frequently at a loss for where to begin their process modeling efforts. To help jump-start BPMN process modeling and analysis efforts, we are supplying a set of pre-built models and simulations for popular processes. These models were built through real-world process improvement engagements. These models are not expected to match your organization’s own processes, but should help you get a head start on your modeling and process improvement efforts. To help you better understand the models, simulation results, and improvement reports, this companion guide will offer a summary of the business situation that established their creation.

Request for Loan Modification at Big CorpIn May 2011, the Mortgage Banker’s Association reported that 8.1% of all residential property loans in the United States were delinquent 90 days or more. In order to help home owners better manage their mortgage challenges, the Obama Administration’s “Making Home Affordable Program” created a defined loan modification process through which borrowers who are in default, at risk of imminent default, or in foreclosure can have their loans modified to a more affordable monthly payment targeted at 31 percent of their monthly gross income.

In order to process requests under this program, homeowners needed to submit a Request for Modification and Affidavit (RMA) form to their bank.

For the many banks, processing of RMA requests has been a manually intensive process, with documents being collected, organized, and tracked across paper folders on desks, email messages, fax machines, and mailrooms – all across numearous processing departments. Big Corp was one such bank.

Big Corp is a large regional bank headquartered in Boston that serves four New England states. In 2010, the bank processed over 100,000 home mortgages for its clients. Like many banks that offered mortgages through the real estate bubble, delinquencies and defaults are an unfortunately part of their business today. Big Corp employs 20 people in its loan processing center to assist with RMA requests.

Challenges with Processing Modification RequestsThe RMA team at Big Corp processes over 500 RMA requests each month. Although twelve processors assigned to handle the front end collection and reviews, they were challenged to complete their work in a timely manner. When documentation was missing, the customer or another process worker in the bank was asked to send in the required information. Tracking was completed using hand-written checklists that were attached to each RMA applicant’s folder. Coupling incoming faxes and emails with the physical folder resulted in processing times that exceeded the Big Corp’s service level agreements.

Software RequirementsThe current and future state process models are visible to anyone with access to Visio 2007 or greater. In order to access the native BPMN stencils and process simulation, Visio Premium 2010 and its analystView simulation plug-in are required. If you do not currently own Visio or analystView, free 60-day trials of the software are available at:

http://visiotoolbox.com/2010/ trial-downloads.aspx

http://www.global360.com/products/process-discovery-analysis

Following process discovery, the business analyst created a model of the current RMA process.

About Global 360As the leader in process and case management solutions, Global 360 has helped 2,000 customers in 70 countries reduce paper, automate processes, and empower individuals to deliver increased productivity and business performance while reducing operational costs. As a business process management (BPM) market leader on the Microsoft® platform, our products enable customers to improve business performance and maximize the productivity of all participants in a process, as well as leverage and extend their Microsoft investments in BizTalk®, SharePoint®, Visio® and Office®. Global 360 is headquartered in Texas with operations in North America, Europe, South Africa and Asia Pacific. For more information visit www.Global360.com

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Improvement of this process at Big Corp began with the manager of the RMA processing team clearly defining the following goals:

» Average overall processing time not to exceed 7 hour SLA

» Keep current RMA staffing levels at or below 20 individuals

» Reduce RMA processing costs by 25%

Understanding and Validating the Current RMA Process Following process discovery sessions with the RMA staff, a business process analyst at Big Corp used Visio to quickly visualize the current process (as-is) used to handle the applications. Next, the business process analyst incorporated additional detail into the model, including: process activity, participants, resources, time requirements, costs, etc. The details were paired to the model using a Visio plug-in named analystView that helps simulate and report on the performance of a modelled business process.

To ensure the RMA application processing model accurately reflected the operations at Big Corp, the process analyst simulated the current process map to validate her diagram with the RMA Manager and other process stakeholders.

Analysing and Optimizing the RMA ProcessNext, the process analyst wanted to explore alternatives to improve the application process. By visually assessing the process model and holding discussions with the stakeholders involved, it was evident that several departmental tasks could be performed in parallel, accelerating the application completion rate. By organizing work and stakeholder collaboration through a case management software solution, the front end processors could better organize and track applications, customers could be kept up-to-date with a more accurate report of their application’s status, and fulfilment operators would not have to search for missing or misfiled documentation that needed to accompany each application.

Additionally, by automating some of the tasks and monitoring the readiness of application documentation with the case management software suite, the business analyst explained to the RMA Manager how staffing of front-end processors could be reduced significantly and reallocated to support other businesses at the bank – lowering her overall operating costs for the team.

Measured Results of Improving the RMA ProcessThe BPMN process modelling and simulation exercise at Big Corp provided a clear understanding of what their current (as-is) process was and concise changes they could take to meet their goals. With these specific changes in place, Big Corp’s revised (to-be) process resulted in a 50% reduction in cost to process applications. The new case management software suite allowed the remaining processors to spend more time on application reviews and less time tracking down missing or misfiled documentation. And the average overall processing time was also reduced from 7 hours and 44 minutes to 5 hours – helping the RMA team meet its SLA for the first time in months.

What-if scenarios were used by the Business Process Analyst to compare process improvement alternatives.