International Business Machines Corp. created a mortgage lending services unit that it says can automate every aspect of the lending process.
The unit, IBM Lender Business Process Services Inc., is expected to begin operations in the third quarter and will use software from two companies IBM bought last year.
The Armonk, N.Y., company says its technology can handle loan applications, underwriting processing, third-party vendor management, document preparation, and closing.
Industry observers said that most mortgages are still completed on paper, but that the industry is trying to automate much of the process.
In October, IBM bought the Costa Mesa, Calif., content management company FileNet Corp. for about $1.6 billion. The next month IBM bought Palisades Technology Partners, an Englewood Cliffs, N.J., provider of services and technology for the mortgage industry.
Greg A. Sullins, the executive director of IBM Lender Business Process Services, said in an interview Monday that the unit will offer a "private-label mortgage loan originations and outsourcing service" using technology from the two acquired companies and IBM's global distribution capabilities.
He stressed that the unit will not originate loans itself. Lenders are "always going to determine how to underwrite loans," he said. "We're acting as an agent of the lender. We're not getting involved in anything you wouldn't do yourself."
Mr. Sullins was the chief executive of Financial ServiceSolutions LLC, a mortgage-outsourcing venture that Bank of America Corp. founded in 2003 and shuttered last year.
Craig Focardi, a research area director for the consumer lending practice at TowerGroup, an independent research firm owned by MasterCard Inc., said that the mortgage lending industry is trying to automate more steps in the origination process.
IBM is ahead of the curve, he said, because it has both an electronic core origination platform and an enterprise content management platform that can convert paper applications to electronic ones.
IBM "has the distinction of having both pieces, and potentially a tighter integration and a better offering for lenders," he said.
