Magazine article American Banker

EDS to Vie in U.K. Mortgage Services Niche

Magazine article American Banker

EDS to Vie in U.K. Mortgage Services Niche

Article excerpt

In the latest sign that U.S. mortgage companies are going global, Electronic Data Systems Corp. plans to start processing and subservicing loans for lenders in the United Kingdom. EDS, which is sending mortgage veteran Michael A. Hyman to its U.K. office to lead the effort, is one of several U.S. companies that want to become the main outsourcer for the U.K. home loan industry. Others are Global Home Loans, a joint venture between Countrywide Credit Industries and Woolwich PLC; a joint venture between Alltel and Bradford & Bingley; and HomeSide Lending. These companies will focus on working behind the scenes for existing U.K. lenders. They will handle back-office functions like the processing of mortgage applications and the servicing of loans, areas in which their technology and experience in the most advanced mortgage market in the world can reduce costs. The United Kingdom appears to offer plenty of opportunity for companies looking to market cost saving services. Richard Beidl, a senior analyst at Tower Group of Needham, Mass., said his firm has found the annual cost of servicing a U.K. mortgage to range from $80 "for someone at cutting edge" to $250 "at the trailing edge." This contrasts with U.S. loans, which are serviced for as little as $35 to $45 per year. A lot of U.K. companies simply do not know what their servicing cost is because the mortgage process there is not broken down into many different pieces as in the United States. "The numbers aren't easily separable," Mr. Beidl said. "They don't know where their biggest costs are." Therefore, "there's a huge opportunity for people who can bring not only the systems but the mechanics to help and change the systems over there," Mr. Beidl said. Mr. Hyman, 43, was most recently a senior vice president at Wendover Financial Services Corp., EDS' Greensboro, N.C., mortgage unit and the largest servicer of reverse mortgages, a type of home equity loan geared to the elderly. …

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