Process engineering of Property valuation – “Broker Price Opinions” (BPO):

Background and Client Challenge:

A residential mortgage fund with over $6 billion of whole loan mortgages under management approached C&A Consulting to assist them in reviewing their process of ordering BPO’s from third parties. Though multiple departments were ordering BPO’s from a centralized valuation group, this group did not have an efficient repeatable process or sufficient metrics to provide management with meaningful information. The existing process led to the likelihood of ordering duplicate valuations from vendors. Further, the firm had no ready means of allocating the cost of the BPO valuations back to the business unit which ordered them. Therefore, the client manually allocated costs back to the business unit. This increasingly became an inefficient and untimely process. Further, some third party vendors used by the client could not provide valuation information in an automated format. Therefore, the client had to manually key valuation information into their servicing system.

Solution:

C&A reviewed the client’s front to back BPO process based on its unique product mix and organizational structure. C&A used its knowledge of industry standards as it identified control and efficiency gaps in the existing process. C&A then teamed with the valuation group to create a new workflow and a more transparent process in ordering BPO valuations. C&A was sensitive to the fact that the client’s personnel were under the microscope for perpetuating an inefficient process, and therefore created a
team atmosphere to work towards a unified solution.

Results:

C&A presented a unified, improved process to senior management. The identification of areas for improvement provided the client with the following:

  • Central ordering functionality – The client reduced the number of third party vendors to two.
    The preferred vendors are able to provide a reduced pricing model and are able to provide valuation information in an automated fashion.
  • The new process easily identifies duplicate requests – Duplicate requests were virtually eliminated thereby saving the firm money and time.
  • The new process easily identifies the department originating the BPO request – This new process allows the firm to effectively and timely allocate cost information to the requesting department.
  • The firm now has a centralized repository of BPO valuation information that it can draw upon.