Xerox is bringing its document management expertise into the famously convoluted mortgage industry, an area in dire need of technology solutions to wring out archaic processes and Byzantine layers of complexity.
The Rochester, N.Y.-based Xerox Sept. 12 said it would buy Advectis, maker of BlitzDocs, one of the few comprehensive electronic document collaboration tools purpose built for mortgage lenders. Xerox will spend $32 million in cash for Advectis, of Alpharetta, Ga.
"While the sub-prime mortgage concerns make headlines, the mortgage industry is still big business and is ripe for change. The industry is integrating more technological advancements into how it conducts business, providing opportunities for Xerox to add value through its document management services and technology," said John Kelly, president of Xerox Global Services, North America. "Advectis will be a key part of this value proposition and Xeroxs competitive advantage. This acquisition will provide Xerox a strategic entry into the global mortgage outsourcing market."
The goal for Xerox is to offer an end-to-end document management system for financial lenders at a time of crisis in that industry. The complicated, paper-based legacy processes used to handle loan sales, origination and approval have long been a source of consternation for mortgage companies. Inefficient, complex loan systems often lead to applications being mishandled and credit rules being applied inconsistently, according to analysts. And with no centralized management, lenders are often unable to asses their portfolios and manage risk.
The shortcomings are in no small part responsible for the current mortgage crisis, experts say. According to research firm the TowerGroup, the paper-centric process typical in the lending industry can lead to a loss of control in the quality of the loans and led to additional costs in loan origination of some $3.2 billion last year.
With BlitzDocs, lenders use an electronic folder that mirrors current paper-based loan cycle processes but boosts efficiency by allowing mortgage participants to work with online documents and redistribute updated files to multiple users. BlitzDocs relies on a combination of proprietary software and third-party tools from Microsoft and Adobe. With the Advectis tool suite, scanned and faxed loan documents are captured in a TIFF file then converted to PDF for delivery. Meanwhile, data from electronic forms is transferred via XML, facilitating access by the myriad departments and organizations lenders typically engage in the course of making a loan.
"We think of Advectis as a company that covers this market from Main Street to Wall Street. So combined with solutions from Xerox, this deal will allow lenders to meet current challenges and prepare them for the inevitable rebound in mortgage originations in the future," said Gregory Smith, CEO and co-founder of Advectis. "The tighter underwriting and regulatory standards in the mortgage industry are expected to drive a greater need for advanced technology solutions for improved documentation and data control across all lines of the loan process, so this acquisition comes at an opportune time."
Founded in 2000, Advectis employs about 41 people mostly in its Atlanta offices. After the acquisition, those employees are expected to join Xerox, with Smith staying on to lead the organization and reporting to Kelly. The acquisition is expected to close in the next 30 days, subject to approval.