# Presentation: 270517

## Developing the Best-In-Class
End-to-End Disaster Loan Process

RAPID IMPROVEMENT CAMPAIGN I

**Developing the Best-In-Class**
**End-to-End Disaster Loan Process**
- RAPID IMPROVEMENT CAMPAIGN I

**Leadership Jumpstart Event Report**
**January, 2007**

## Contents

**Recap of Campaign Background and Jumpstart Event Charter**
**Leadership Jumpstart Event Participants and Process**
**Executive Summary**
**Defining the Target: The Vision and Scorecard for Best-in-Class End-to-End Process Performance**
**Measuring the Baseline: The Big Areas of Waste  In the “As Is” Process and the Opportunity for Cycle Time Gains and Cost Reduction.**
**Analyzing Breakthrough Requirements: The Key Factors for Designing an End-to-End Process to Achieve and Sustain Best-In-Class Performance.**
**Innovating the Breakthrough Blueprint: What Best-In-Class Process looks like and the Organization and Support Required to Operate it.**
**Controlling for Rapid, Risk-Managed Implementation: Proposed Rapid Improvement Campaign Action Plan **

- “What makes our mission in disaster so challenging is that we have to be *both *super responsive to disaster victims and totally responsible to policies. There’s no room for waste, delay or confusion.”
-                                             End-to-End Leadership         			                    Jumpstart Participant

**Foreword **

## End-to-End Disaster Loan ProcessRapid Improvement Campaign Background

- Based on success of the 90/45 Campaign initiated in August 2006 at the PDC to reduce disaster loan disbursement backlog, an executive decision was made to sponsor a series of new Rapid Improvement Campaigns in 2007 to design and implement improvements across the end-to-end disaster loan process.
- The scope of these Rapid Improvement Campaigns was targeted to  extend beyond the PDC to include the Sacramento and Atlanta Field Operations, Buffalo Call Center, DCMS and the Personnel and Administration Support Center.
- A three-day Leadership Jumpstart Event was convened on December 13  to 15, 2006 with leaders from across all disaster loan operations, to explore options and recommend opportunities for immediate and longer-term improvement.

- Develop the blueprint for the End-to-End Disaster Loan Process that will enable SBA to be seen as the model for customer satisfaction, efficiency and compliance in disaster relief operations.

- Redesigned end-to-end process that documents how breakthrough levels of performance can be achieved.
- Identification of key support requirements for sustaining breakthrough performance.
- Clear, prioritized and executable plan of action to convert the redesign to reality.

**Present First-Pass Recommendations: ****	****12/16/06**
**Launch End-to-End Rapid Improvement****Campaign I:****	****By 1/23/07**

**CALENDAR****COMMITMENTS**

**SUCCESS                      **
**METRICS**

**GOAL**

**End-to-End Disaster Loan Process****Leadership Jumpstart Event Charter**

## End-to-End Disaster Loan ProcessLeadership Jumpstart Event Charter (cont’d)

- End-to-End Breakthrough Performance Requirements and Identification of Key “In Process” Performance Metrics.
- End-to-End Breakthrough Performance Process Maps.
- End-to-End Breakthrough Performance Support Requirements Including Policy, Staffing and Training, QA and Technology.
- Portfolio of Action Recommendations – *immediate, mid-term and longer-term for achieving breakthrough performance levels.*

**End-to-End Disaster Loan Process****Leadership Jumpstart Event Charter *****(cont’d)***

**KEY****JUMPSTART****WORK****PRODUCTS**

## Leadership Jumpstart Event Participants

**END-TO-END CAMPAIGN                 EXECUTIVE SPONSORS**

**Steve Preston**
**Herb Mitchell**
**Pat Rea**

**END-TO-END LEADERSHIP JUMPSTART PARTICIPANTS**

**Steve Preston**
**Herb Mitchell**
**Pat Rea**
**Jovita Carranza**
**Christine Liu**
**James Rivera**
**Fran Bieber**
**Lee Cook**
**Geoff Green**
**Lisa Lopez**
**Bill Leggiero**
**Al Judd**
**Frank Skaggs**
**Mike Sorrento**
**Jim Ryan**
**Cindy Pitts* ****Elsie Collins***

**END-TO-END CAMPAIGN               GOVERNING BOARD**

**Jovita Carranza**
**Christine Liu**
**Steve Galvan**

**James Rivera**
**Fran Bieber**
**Lee Cook**
**Geoff Green**
**Lisa Lopez**
**Roger Garland**

**Bill Leggiero**
**Al Judd**
**Frank Skaggs**
**Mike Sorrento**
**Al Hoberman***
**Bridget Dusenbury***

**Burt Warner**
**Rob Goodson**
**Blane Wentlent**
**Steve Redding**
**Tami Ralstin**
**Celia Horner**
**Brenda Smith**
**Andy Neubauer**
**Craig Barrett**
**Tanya Garfield**
**Brenda Ballen**
**Colleen Hiam**
**Wade Butler**
**Mike Ledford**
**Harlan Pavlas**
**Mike Moseley**
**Monica Smith **

*** ****Member of the Campaign Team not available to attend)**

## Leadership Jumpstart Event Methodology

_**D**_**EFINE ****the****Target**

**1**

**2**

**3**

**4**

**5**

_**M**_**EASURE ****the****Baseline**

_**I**_**NNOVATE ****Breakthrough ****Blueprint**

_**C**_**ONTROL ****For Rapid,****Risk-Managed****Implementation**

_**A**_**NALYZE ****Breakthrough Requirements**

**What does end-to-end success look like and how do we measure it?**

**Where are the big areas of waste in the “As Is” process?**

**What are the keys to designing a process that can sustain breakthrough performance?**

**How can we apply Lean, Six Sigma and innovative thinking to make a quantum improvement in performance?**

**How do we accelerate implementation and minimize risk?**

## Executive Summary

- While significant improvements have been realized in the disaster loan process since August of 2006, the Jumpstart Event validated that further breakthroughs in performance can be accomplished by engaging the entire end-to-end disaster loan organization.
- Major barriers to breakthrough identified by Jumpstart Participants include: 1.) Reliance on paper loan applications that slow initial processing;                    2.) Incomplete and inaccurate applicant information that creates downstream rework; 3.) Lack of automated loan approval policies and system support for credit worthy/low risk applicants; 4.) Under-utilization of field and call center resources to facilitate borrower-driven delays in loan processing; 5.) SOPs that slow processing of loan file changes and loan modifications; and, 6.) Lack of technology system and organization structure that makes it easy to scale up and down to meet loan processing demand.
- The Jumpstart Team worked in parallel sub-teams to systematically analyze the end-to-end disaster loan process from application to complete disbursement including supporting processes such as loan modification, title desk, document generation, etc.

## Executive Summary (cont’d)

- “As Is” process assessment completed during the Jumpstart estimated an end-to-end loan processing cycle time *(actual elapsed time from application receipt to full disbursement)* of approximately **6 to 74 days** with **15.5** hours of touch time *(actual labor hours processing the loan).* Adding a loan modification increases the cycle time an additional **1 to 26** or more days and adds a minimum of **1 to 11.5** hours touch time.
- Elimination of rework and delays in the “As Is” process was conservatively estimated to offer the potential for over **$19M** in labor hour savings.
- The Jumpstart Team applied Lean design and other innovative ideas to redesign the end-to-end disaster loan process. Major innovations in this redesign include: 1) Shift to an electronic loan application to speed processing and reduce data file errors; 2) Streamlining loan approval by automating unsecured loan decisions and repositioning loss verification to post-application review to eliminate wasted effort; 3) Simplifying loan disbursement by ensuring complete loan packages upfront and empowering loan processors to make non-financial file updates and changes; 4) Improving the response time on supporting legal services; and 5) Developing a “one pass” approach to loan modification through the development of a specialized, legal authority empowered loan modification specialist.

## Executive Summary (cont’d)

- This end-to-end process redesign will offer the opportunity to capture a significant portion of the $19M in labor hour savings by potential reducing touch times by **50%** and reducing the variability in total end-to-end cycle-times from **6 to 74 days to 8 to 14 days** and from **1 to 26 or more days for loan modifications to 1 to 2 days.**
- The Jumpstart Team also developed a first-draft Balanced Scorecard for measuring end-to-end disaster loan performance as well as a potential organizational framework to support execution of the redesigned end-to-end process. Operationalizing these models will require further study, discussion and testing.
- The last activity of the Jumpstart Team was to identify the actions required to move forward. A total of **14 immediate** *(within 30 to 60 days),* **12 intermediate** *(within 60 to 90 days),* and **7 longer-term actions** were identified. Executive sponsor support from Steve Preston and Herb Mitchell was received to move forward on all of the immediate and intermediate actions.
- A proposed campaign plan and governance structure for executing these actions is detailed in the final section of this report.

## What Does End-to-End Success Look Like and How Do We Measure It?

**Defining the Target**

## The Vision for Best-In-ClassDisaster Loan Process Performance

- We have the flexibility and ability to scale up or down to meet both volume and operating cost requirements. We are always ready with no waste.
- We provide the borrower/disaster victim with a seamless experience from start to finish with no gaps in communication and smooth hand-offs.
- We are able to accurately measure our processing costs and operate favorably in comparison with benchmark organizations.

**The Vision for Best-In-Class****Disaster Loan Process Performance**

***We know we will have arrived at Best-In-Class performance when:***

## The Vision for Best-In-ClassDisaster Loan Process Performance (cont’d)

- We have a completely trained staff with certification requirements in place and self-auditing of performance as part of a comprehensive quality assurance program.
- We operate with a streamlined process for revising policy guidance, writing simple-to-follow SOPs and making rapid system design changes to ensure responsiveness to borrower needs while maintaining adherence to regulations.
- The SBA is seen as the model for disaster response effectiveness and efficiency that others want to emulate.

**The Vision for Best-In-Class****Disaster Loan Process Performance *****(cont’d)***

***We know we will have arrived at Best-In-Class performance when:***

## First-Draft End-to-End Disaster Loan ProcessBalanced Scorecard for Measuring Best-In-Class Performance

**Performance****Category**

**Critical****Performance****Expectations**

**Key****Metrics**

**CUSTOMER****SERVICE**

**PROCESSING****EFFICIENCY**

**REGULATORY****COMPLIANCE**

- Easy-to-understand process from start-to-finish.
- Seamless hand-offs – no gaps in transferring responsibility.
- Empathy and courtesy at all times.
- Fast turnaround on all SBA controlled actions.

- High volume of processing actions per servicing function.
- Industry comparable total cost per loan processed.
- Minimal rework due to errors/omissions.
- Overall speed in delivering funds to disaster areas.

**Best-in-Class****Performance****Goals**

- All applications and loans processed in accordance with legal and other regulatory requirements.
- No improper loan disbursements.
- Adherence to internal SOPs.

- Response time on all inquiries.
- Turnaround time on key SBA controlled actions *(approval, closing, disbursements & mods)*
- Customer satisfaction survey scores.
- Complaint tracking and resolution.

- Number of standard processing actions performed within standard lead times.
- Loan processing costs *(by function/by type of loan)*
- Error rate per thousand loans processed.
- Total end-to-end cycle time *(unsecured loans/secured loans)*

- Number of exceptions per external audit.
- Number of improper payments.
- Score on internal audit of controls and compliance with SOPs.

- 24 hr. response or less on all inquiries.
- 50% reduction over current baseline on key turnaround times.
- 80% or better 4/5 level scores on satisfaction index.
- Less than 10% recurring complaints.

- 3X improvement vs. current output volume.
- Industry comparable processing costs (by function, by type of loan).
- 50% or better reduction in number of rework “touches” per loan.
- Less than 60 days on all unsecured loans/less than 6 months on all secured loans.

- 98% or better “no exceptions” score on external audits.
- 10 or less improper payments per 10,000 loans.
- 98% or better “no exceptions” score on internal audits.

## First-Draft End-to-End Disaster Loan ProcessBalanced Scorecard for Measuring Best-In-Class Performance

**Performance****Category**

**Critical****Performance****Expectations**

**Key****Metrics**

**PROACTIVE****DEMAND****MANAGEMENT**

**INTERNAL****CAPABILITY****IMPROVEMENT**

**POSITIVE****PUBLIC****PERCEPTION**

- Robust surge plans in place.
- Rapid response capability to surge conditions.
- Effective management of relationship with disaster partner agencies and organizations.

- Sourcing and hiring to meet job qualification standards *(not over or under hiring).*
- Effective, rapid orientation and training of all personnel.
- Certification of staff qualifications and ability to meet performance standards.
- Tools, resources and systems in place to ensure high performance.

**Best-in-Class****Performance****Goals**

- Consistent, frequent messaging on SBA disaster activity to all stakeholders.
- Proactive personal contact with stakeholders to inform, test understanding and gather intelligence.
- Positive perception of SBA disaster operations across stakeholder groups.

- Annually updated plan in place.
- Pass/fail score on scenario testing of plans.
- Survey of other disaster agencies awareness of SBA plans and operating procedures for disaster scenarios.
- Actual performance in surge scenarios.

- Percentage of new hires meeting qualification standards.
- Percentage of staff completing required training within standard leap times.
- Percentage of staff passing certification tests.
- Percentage of performance support system improvements completed *(IS, QA, Training, etc.)*

- Timely centralized message development distribution and tracking.
- Number of outbound contacts made *(telephone, email, mail, media, etc.)*
- Survey of stakeholders on perception of SBA disaster operations.

- Annual surge plan submitted by due date.
- 80% or better “survival” score on scenario tests of plans.
- 80% or better SBA awareness score on survey of other disaster agencies.

- 90% of new hires meeting 100% of qualification standards.
- 95% of staff completing training within standard lead times *(both new hires and tenured employees).*
- 90% pass rate on certification tests.
- 90% completion of performance system improvements completed by due dates.

- Adherence to messaging standards *(timeliness, accuracy, distribution, etc.)*
- Adherence to outbound calling plan goals.
- 80% or better 4/5 level score on public perception index.

## Where are the Big Areas of Waste and Opportunity forCycle Time Gains and Cost Reductions

**Measuring the Baseline**

## Framework for Analyzing the “As Is” End-to-End Disaster Loan Process

**Framework for Analyzing the “As Is” ****End-to-End Disaster Loan Process**

**DISBURSEMENT**

**LEGAL SERVICES**

**LOAN****MODIFICATION**

**APPLICATION****&****VERIFICATION**

**LOAN****APPROVAL**

## Application and Verification Process – Rework and Delay Analysis

**“****As Is” Macro Process Flow**

**Waiting for****FEMA****directives**

- CompleteDamageSurvey

- DisasterDeclaration/SurgeProcessing

- Coordinatewith otherDisasterAgencies

- IssueLoan Applications

- ScreenApplication

- Auto DeclineNon-QualifiedApplicants

- Scan ApplicationDocumentsinto System

- CompletePre-ProcessingDeclines

- ConductLossVerification

- Secure IRSTax ReturnData

- SendCompletedApplication for                 Loan Approval

**MAJOR SOURCES****OF REWORK****& DELAY**

**MAJOR SOURCES****OF REWORK****& DELAY**

**1**

**2**

**3**

**5**

**6**

**7**

**8**

**9**

**10**

**11**

**4**

**OUTPUT**

- DisasterEvent

**1**

**INPUT**

- EnterApplicationinto System

## Application and Verification Process – “As Is” Process Efficiency Assessment

- *Cycle Time = Total end-to end elapsed time to process one application/loan file

- **First-Time Quality = Percentage of time application/loan file is processed with no rework.

- **Human Touch Time = Actual time in staff minutes/hours to complete the process step.

**TOTALS: Post-Application Issue**

**2 to 21 days**

**70%**

**4 hrs**

- Pre-LoanApplication

- Post-LoanApplication

## Application and Verification Process – “As Is” Process Savings Opportunity Size-Up

- Unnecessary loss verifications conducted on non-qualified applications.

**Application and Verification Process – ****“As Is” Process Savings Opportunity Size-Up**

_**ESTIMATED COST PER**__**UNIT/TRANSACTION**_

_**PROJECTED ANNUAL**__**SAVINGS OPPORTUNITY**_

- 5 hours staff cost per file verified *(5 hrs).*
- Assume conservative estimate of 50,000 loss verifications completed per year.
- 25% estimated as unnecessary *(12,500 files).*

- 62,500 potential staff hour saved if unnecessary LVs eliminated *(approximately 32 FTEs assuming 1950 hours per year per FTE).*

- Manual request/follow-up on IRS tax file data.

- 50 FTE equivalents devoted to task today.
- Assume 1950 hours available per FTE per year..

- 97,500 potential staff hours saved if automated IRS interface created

- Manual mailing and processing of applications.

- Assume conservative estimate of 75,000 applications processed per year.
- 4 hours processing per application.
- Assume 50% reduction to 2 hours with use of electronic application

- 150,000 potential staff hours saved assuming 50% reduction in processing time *(4 hrs to 2 hrs)*

## Loan Approval Process – Rework and Delay Analysis

**“****As Is” Macro Process Flow**

- AssignFile toLoan Officer

- ScreenApplication

- Conduct
- Eligibility, Credit & Repayment Analyses

- PrepareRecommendation, Approve orDecline

- SeniorLoan OfficerReview

**MAJOR SOURCES****OF REWORK****& DELAY**

**1**

**2**

**3**

**5**

**6**

**4**

- ReceiveApplication

**1**

**INPUT**

- LegalReview

- Return toLoan Officerfor FinalProcessing

- LoanDecision:Approve/Decline

**7**

**8**

**OUTPUT**

## Loan Approval Process – “As Is” Process Efficiency Assessment

**Loan Approval Process – ****“As Is” Process Efficiency Assessment**

**“****As Is” ****Process Step**

- Assign file toLoan Officer

- ScreenApplication

- Conduct Eligibility Credit& Repayment Analyses

- Prepare Recommendation:Approve or Decline

- Senior LoanOfficer Review

- Legal Review

- Return to Loan Officerfor Final Processing

**TOTALS**

**Estimated Cycle Time****to Complete ***

**Estimated First-Pass****Quality  Rate****

**Estimated Human****“Touch-Time” *****

- 2 hrs *(home)*4 – 6 hrs *(bus)*

- 30 mins to 1 hr

- 95%

- 95%

- 85%

- 95%

- 90%

- 90%

- 95%

- 5 mins

- 15 – 30 mins

- 30 mins – 2 hrs *(home)*30 mins – 6 hrs* (bus)*

- 30 mins – 1 hr

- 30 mins – 2 hrs

- 30 mins – 2 hrs

- *Cycle Time = Total end-to end elapsed time to process one application/loan file

- **First-Time Quality = Percentage of time application/loan file is processed with no rework.

- **Human Touch Time = Actual time in staff minutes/hours to complete the process step.

- 5 mins to 1 day

- 15 mins to 7 day

- 30 mins to 7 days

- 30 mins to 7 days

- 5 mins – 30 mins

**4 hrs – 21+ days *****(home)***

**6 hrs – 21+ days (bus)**

**56%**

- 5 mins – 30 mins

**2.5 hrs – 6.5 hrs**

**2.5 hrs – 10.5 hrs**

**= Process Steps Flagged                                                          for Savings Opportunities**

## Loan Approval Process – “As Is” Process Savings Opportunity Size-Up

- Lack of efficient batch approach to assigning files to loan officers for initial review.

**Loan Approval Process – ****“As Is” Process Savings Opportunity Size-Up**

_**ESTIMATED COST PER**__**UNIT/TRANSACTION**_

_**PROJECTED ANNUAL**__**SAVINGS OPPORTUNITY**_

- Potential savings of 20 mins per loan file reviewed.
- Assume conservative estimate of 50,000 loan files processed.

- 16,666 potential staff hours saved

- Rework of files after SLO or legal review due to inexperience of LOs, complexity of current process and inadequately standard approval guidelines.

- 200 LOs working approx 1,920 hours per year – 384,000 work hours.
- Average of 10% of LO time invested in rework – 38,400 hours.

- 19,2000 potential staff hours saved *(based on 50% reduction in rework hours)*

- Processing unqualified/ incomplete applications.

- Assume conservative volume of 50,000 loan files processed per year.
- Assuming 20% of files processed should have been declined/referred prior to LO action, yields opportunity to eliminate need for processing approx 10,000 files per year.
- Based on conservative touch time of 2.5 hrs per loan yields 25,000 hrs in freed-up staff hours.

- 25,000 potential staff hours saved

## Disbursement Process – Rework and Delay Analysis

**“****As Is” Macro Process Flow**

- Generate LoanDocuments &assign Case Mgr.

- Case Mgr.ReceivesDocuments

- ReviewDocuments

- ManageExceptions/Loan mods

- InitiateDisbursements

- OrderDisbursement

- ScheduleDisbursement

- CompleteEscrowClosing*(If required)*

- Transfer FileReady forServicing

**MAJOR SOURCES****OF REWORK****& DELAY**

**MAJOR SOURCES****OF REWORK****& DELAY**

**1**

**2**

**3**

**5**

**6**

**7**

**8**

**9**

**4**

**OUTPUT**

- ObligatedFundedLoan

**1**

**INPUT**

- EndorseDisbursement

**Serial “rule of 2” process that requires multiple touches.**

**No automated way to disburse funds.**

**Serial, “rule of 2” process that requires multiple touches.**

**No automated way to disburse funds.**

**No direct connection between DCMS and Disaster Loan Processing.**

**No automated way to transfer file.**

## Disbursement Process – “As Is” Process Efficiency Assessment

**Disbursement Process – ****“As Is” Process Efficiency Assessment**

**“****As Is” ****Process Step**

- Generate Loan Documentsand Assign Case Mgr.

- Case Mgr.Receives Documents

- Review Documents

- Manage Exceptions/Loan mods

- InitiateDisbursement

- EndorseDisbursement

- OrderDisbursement

- ScheduleDisbursement

- Complete EscrowClosing

**TOTALS: Without Escrow       Closing**

**Estimated Cycle Time****to Complete ***

**Estimated First-Pass****Quality  Rate****

**Estimated Human****“Touch-Time” *****

- 1 to 2 days

- 6 Hrs - 26 days*(5-12 Months for problem loans)*

- 2 hrs – 1 day

- 90%

- 90%

- 95%

- 99%

- 99%

- 99%

- 50%

- 20 mins – 1 hr

- 1 hr – 8 hrs

- 20 mins

- 5 mins

- 5 mins

- 3 hrs – 24 hrs

**3 days  - 32 days*****(Up to 12 months for problem loans)***

**66%**

**2 hrs – 8 hrs**

- *Cycle Time = Total end-to end elapsed time to process one application/loan file

- **First-Time Quality = Percentage of time application/loan file is processed with no rework.

- **Human Touch Time = Actual time in staff minutes/hours to complete the process step.

**33%**

**5 hrs – 32 hrs**

- 2 hrs – 1 day

- 2 hrs – 1 day

- 2 hrs – 1 day

- 4 hrs - 3 days*(Up to 2 months if title work)*

- 5 mins

**3.2 days  - 35 days*****(Up to 12 months for problem loans)***

**= Process Steps Flagged                                                          for Savings Opportunities**

**TOTALS: With Escrow       Closing**

## Disbursement Process – “As Is” Process Savings Opportunity Size-Up

- Waiting to receive vesting deeds on secured loans resulting in need for multiple “re-touches” and rework of loan vs. securing deeds at time of application/ approval.

**Disbursement Process – ****“As Is” Process Savings Opportunity Size-Up**

_**ESTIMATED COST PER**__**UNIT/TRANSACTION**_

_**PROJECTED ANNUAL**__**SAVINGS OPPORTUNITY**_

- Estimated 4 hrs of added touch time per secured loan.
- Assume 25,000 unsecured loans per year require rework for vesting deeds.

- 100,000 potential staff hours saved *(vs. cost of $350,000 to secure deeds upfront through 3**rd** party service @$14.00 per deed).*

- Need for in-house title desk to process borrower checks for title work vs. funding the work out of loan proceeds.

- Eliminates need for in-house title desk.
- Potential to free-up or reduce equivalent of 10 FTEs at approx 1950 annual hours per FTE.

- 19,500 potential staff hours    saved per year

- Inability to allow case managers and others to make simple non-financial loan mods and such as address and name changes.

- Estimated to require approx 4 hrs staff time for each non-financial mod.
- Assume 25,000 loans per year require non-financial mods.
- Assume reduction from 4 hrs to 1 hr per mod for savings of 3 hrs per mod.

- 75,000 potential staff hours saved

## Disbursement Process – “As Is” Process Savings Opportunity Size-Up (cont’d)

**Disbursement Process – ****“As Is” Process Savings Opportunity Size-Up *****(cont’d)***

_**ESTIMATED COST PER**__**UNIT/TRANSACTION**_

_**PROJECTED ANNUAL**__**SAVINGS OPPORTUNITY**_

- Lack of bar code identification on incoming loan documents creates extra touch time.

- Assume 1 hr extra touch time per loan due to lack of bar coding.
- Assume conservative volume of 50,000 loans per year.

- 50,000 potential staff hours saved per year

- Lack of policy to grant SBA limited power of attorney to make simple legal document changes vs. mailing back to borrower for signature.

- Assume 1 hr extra touch time per loan.
- Assume 25% of loans require mail/ fax back to borrower resulting in 12,500 loans taking  one extra hour of processing.

- 12,5000 potential staff hours saved per year

- Lack of policy to support use of application signature to serve as signature for unsecured loans.

- Assume 2 hrs extra touch time per unsecured loan due to need to secure second signature.
- Assume conservative estimate of 25,000 unsecured loans per year.

- 50,000 potential staff hours saved per year

## Loan Modification Process – Rework and Delay Analysis

**“****As Is” Macro Process Flow**

- Request for Loan Modification

- Loan Officer Assignment & Review

- Action Recommended by Loan Officer

- Action Reviewed by Senior Loan Officer

- Legal Department Concurrence of Action

**MAJOR SOURCES****OF REWORK****& DELAY**

**1**

**2**

**3**

**5**

**6**

**4**

- LoanModComplete

**OUTPUT**

- Need for Change in Loan Terms/Document

**1**

**INPUT**

- Posting of Loan Mod

## Loan Modification Process – “As Is” Process Efficiency Assessment

**Loan Modification Process – ****“As Is” Process Efficiency Assessment**

**“****As Is” ****Process Step**

- Request for LoanMod Action

- Loan Officer Assignmentand Review

- Action Recommended byLoan Officer

- Action Recommended bySenior Loan Officer

- Legal DepartmentConcurrence of Action

- Posting of LoanMods

**TOTALS**

**Estimated Cycle Time****to Complete ***

**Estimated First-Pass****Quality  Rate****

**Estimated Human****“Touch-Time” *****

- 15 mins – 15 days*(includes customer review & signature time)*

- 1 hr – 5 days

- 65% - 98%

- 75%

- 75%

- 80%

- 90%

- 98%

**26% - 39%**

- 5 mins

- 15  mins – 1 hr

- 15 mins – 6 hrs

- 15 mins – 2 hrs

- 15 mins – 2 hrs

- 5 mins – 20 mins

- *Cycle Time = Total end-to end elapsed time to process one application/loan file

- **First-Time Quality = Percentage of time application/loan file is processed with no rework.

- **Human Touch Time = Actual time in staff minutes/hours to complete the process step.

- 15 mins to 3 days

- 15 mins to 1 day

- 4 hrs – 1 day

- 15 min – 1 day

**6 hrs – 26 days+**

**1 hr – 11.5 hrs**

**= Process Steps Flagged                                                          for Savings Opportunities**

## Loan Modification Process – “As Is” Process Savings Opportunity Size-Up

- Processing incomplete loan modifications resulting in rework by loan officer, senior loan officer and legal staff.

**Loan Modification Process – ****“As Is” Process Savings Opportunity Size-Up**

_**ESTIMATED COST PER**__**UNIT/TRANSACTION**_

_**PROJECTED ANNUAL**__**SAVINGS OPPORTUNITY**_

- Assume 12,500 necessary loan mods per year *(20% of 50,000 total annual loan volume.)*
- Assume 2 hrs of rework time per loan.

- 25,000 potential staff hours saved per year

- Back and forth time between LO, SLO and legal due to lack of single-pass review and correction process.

- Assume 2 hrs of “back and forth time” per loan mod
- Assume 50% of 12,500 necessary loan mods require back and forth.

- 12,500 potential staff hours saved per year *(based on 2 hrs X 6,250 loans)*

- Processing of unnecessary loan mods *(non-financial changes that could be made directly into the file).*

*(Calculated in loan disbursement process* analysis.)

## Legal Services – Rework and Delay Analysis

**Legal Services Process Descriptions**

**1**

**A**

**DOCUMENT****GENERATION**

**B**

**CHECK****ORDERING**

**C**

**COLLATERAL****PROCESSING**

**D**

**TITLE****DESK**

**E**

**APPOINTMENT****SETTING**

**1**

**A****1****.****	****Requests for doc’s – new loan, mod, misc.**

**1**

**A****2****.****	****Type, proof & assemble documents.**

**1**

**A****3****.****	****Send docs to borrower**

**Complexity, volume of docs required.**

**Incorrect file data resulting in incorrect docs.**

**All docs not in DCMS.**

**Creation of docs when borrower is not ready.**

**1**

**B****1****.****	****Request for disbursement**

**1**

**B****2****. Disbursement endorsed, scheduled & ordered.**

**1**

**B****3****.****	****Borrower receives funds *****(EFT or check)***

**1**

**C****1****.****	****Receive collateral docs from closer**

**1**

**C****2****. Assemble collateral folder**

**C****3****.****	****Complete collateral log sheet**

**C****4****.****	****Verify scanned docs and rename**

**C****5****.****	****Create collateral file within DCMS**

**C****6****.****	****Send collateral file to cashier**

**1**

**D****1****.****	****Receipt of executed mortgage or assignment of insurance and fees for recording.**

**1**

**D****2****. Review by closer and submitted**

**D****3****.****	****Request reviewed and processed**

**1**

**E****1****.****	****Documents****generated**

**1**

**E****2****. Schedule with field Ops centers**

**E****3****.****	****Make calls to set/reschedule appointments**

## Legal Services – Rework and Delay Analysis

**Legal Services Process Descriptions**

**1**

**F**

**FREEDOM OF INFORMATION ACT RESPONSE (FOIA)**

**G**

**LEGAL****RESPONSE**

**H**

**FILE****FORWARDING**

**I**

**PRODUCTION ACTIVITY LOGGING SYSTEM (PALS)**

**J**

**FIELD ****CLOSINGS**

**1**

**F****1****.****	****Calls from disaster victims, congress, media, etc.**

**1**

**F****2****.****	****Research and respond to inquiry**

**1**

**G****1****.****	****Calls from disaster victims, congress other SBA offices**

**1**

**G****2****. Research and respond to inquiry**

**1**

**H****1****.****	****Legal review of fully disbursed loan**

**1**

**H****2****. Review of collateral file by collateral cashier**

**H****3****.****	****Transfer physical collateral file to loan servicing**

**1**

**J****1****.****	****Field rep conducts closing with borrower**

**1**

**I****1****.****	****Data recorded by case mgrs & other processing staff**

**1**

**I****2****. Data analyzed and reported**

## Legal Services – “As Is” Process Efficiency Assessment

**Legal Services – ****“As Is” Process Efficiency Assessment**

**Legal Service**

- Document Generation

- CheckOrdering

**Estimated Cycle Time****to Complete ***

**Estimated First-Pass****Quality  Rate****

**Estimated Human****“Touch-Time” *****

- 50%

- 99%

- 10 hrs per loan

- 1 hour

- *Cycle Time = Total end-to end elapsed time to process one application/loan file

- **First-Time Quality = Percentage of time application/loan file is processed with no rework.

- **Human Touch Time = Actual time in staff minutes/hours to complete the process step.

- 1 – 3 days3 – 10 days*(surge situations)*

- 1 – 3 days

- CollateralProcessing

- TitleDesk

- 1 – 2 days3 – 30 days*(surge situations)*

- 1 – 2 days3 – 10 days*(surge situations)*

- 98%

- 85%

- 15 minutes

- 1 hour

**= Process Steps Flagged                                                          for Savings Opportunities**

## Legal Services – “As Is” Process Savings Opportunity Size-Up

- Eliminate need for separate collateral processing by scanning all documents first and turning processing responsibility over to case managers.

**Legal Services – ****“As Is” Process Savings Opportunity Size-Up**

_**ESTIMATED COST PER**__**UNIT/TRANSACTION**_

_**PROJECTED ANNUAL**__**SAVINGS OPPORTUNITY**_

- Assume 15 minutes per document for separate collateral processing.
- Assume conservative estimate of 4,000 collateral documents processed per month uses 1,000 staff hours per month.

- 12,000 potential staff hours saved per year

- Dual file review in file forwarding with collateral cashier.

- Current processing time is4 hrs per file.
- Single review reduces touch time to 1 hr per file.
- Assume conservative estimate of 4,000 file reviews per month produces savings of 12,000 hours per month.

- 144,000 potential staff hours saved per year

## “As Is” End-to-End Disaster Loan ProcessSummary Process Efficiency and Savings Opportunity

- Application and Verification Process *(Post-Application Issue)*

**2**

**3**

**4**

- Loan ApprovalProcess

- DisbursementProcess *

**TOTAL END-TO-END PROCESS *****(Post Application Issue)***

- Loan Modification Process

- Legal Services

- 2 days – 21 days

- 1 day – 21 days

- 3 days – 32 days

**6 days – 74 days**

- 1 day – 26 days+

- 70%

- 56%

- 66%

**22%**

- 26% - 39%

- 4 hrs

- 6.5 hrs

- 5 hrs

**15.5 hrs**

- 1 hr – 11.5 hrs

**Process****Segment**

- Application and Verification Process *(Pre-Application Issue)*

**1**

**Estimated End-to-End Cycle Time**

**Estimated Total****First-Pass Quality**

**Average Estimated****Total Touch Time**

**Estimated Total Savings Opportunity**

- 3 days – 21 daysper event

- 86%

- 40 hrs – 64 hrsper event

- 310,000 staff hours

- 60,866 staff hours

- 307,000 staff hours

**677,866 staff hours**

- 37,500 staff hours

- 156,000 staff hours

**TOTAL ESTIMATED****SAVINGS****OPPORTUNITY**

**871,366 staff hours (*****approx. 447 FTEs)***

## What are the Key Factors for Designing an End-to-End Process to Achieve and Sustain Best-in-Class Performance

**Analyzing Breakthrough Requirements**

## Application and Verification ProcessBreakthrough Roadmap

**Move From: **

- Primary reliance on mail distributed, paper loan applications with “wet signature” requirement.

***Move To:***

***To achieve breakthrough performance in the Application and Verification Process, we must**** ...*

*Electronic application with options for online, telephone/CSR assisted and in person completion without “wet signature” to initiate processing.*

- Manual IRS interface to retrieve tax return (8821) data for applicants.

*Automated IRS interface with appropriate controls to ensure data security.*

- Lack of automated error proofing built into applications to ensure first-time quality on application data.

*Electronic application that does not allow entry of inaccurate or incomplete applications.*

- Lack of ability to import additional data into the application after initial submission.

*Implementation of a certification-based training and testing program that ensures uniform staff compliancy levels.*

*Electronic application that has additional data fields and can import data from other sources.*

- Lack of consistent skill and knowledge levels across application and verification staff.

## Loan Approval ProcessBreakthrough Roadmap

**Move From: **

- Lack of a simplified, automated process for home loan approvals.

***Move To:***

***To achieve breakthrough performance in the Loan Approval Process, we must ...***

*A fully automated home loan approval process on loans up to $240K using credit score criteria.*

- Lack of an automated legal checklist for loan application review.

*A fully automated “smart” legal checklist that can be auto populated based on stipulations.*

- Lack of accurate, linked tracking of companion files *(multiple loans/same* applicant).

*Automated system to link companion files at time of application and easily identified prior to approval review.*

- Lack of effective batching of loan file assignments to improve loan officer efficiency.

*Development of optimal file batching formulas with automated queuing and assignment to loan officers.*

- Lack of consistent skill and knowledge levels across loan approval staff.

*Implementation of a certified-based training and testing program that ensures uniform staff complexity levels.*

## Disbursement ProcessBreakthrough Roadmap

**Move From: **

- A complex, difficult to understand process with no simple computer interface or reporting tool.

***Move To:***

***To achieve breakthrough performance in the Disbursement Process, we must ...***

*A simplified, transparent process that everyone understands and is assisted by an automated system that guides timely and accurate actions.*

- Difficulty in maintaining the right level of resources required to facilitate disbursement across loan portfolios given fluctuations in demand.

*A combination case manager and support services organization that can flex with volume demands while maintaining single point accountability for each loan file.*

- Lack of ability to correct non-financial errors or make changes to loan files without need for a loan mod disbursement delays due to waiting for deeds to create mortgage documents.

*Policy and system support that allows immediate updating and correction of loan files by case managers, loan officers, legal staff, etc., that speeds disbursements*

## Disbursement ProcessBreakthrough Roadmap (cont’d)

**Move From: **

- Delays and additional work due to maintaining internal title desk to process borrower checks to pay for title fees.

***Move To:***

***To achieve breakthrough performance in the Disbursement  Process, we must ...***

*Policy that supports funding of fees out of loan proceeds.*

- Lack of consistent skill and knowledge levels across loan disbursement staff.

*Implementation of a certification-based training and testing program that ensures uniform competency levels.*

## Loan Modification ProcessBreakthrough Roadmap

**Move From: **

- Treating all changes to loan files as loan mods and treating all loan mods as equal.

***Move To:***

***To achieve breakthrough performance in the Loan Modification Process, we must ...***

*A system for making simple loan file changes as they happen with “one touch” and screening and sorting all value-added loan mods based on complexity/risk.*

- Cumbersome system interface for processing mods with limited intelligence built in to prevent errors and limited ability to auto-populate data.

*A streamlined system interface for processing loan mods that is designed to support single touch processing with no errors.*

- Lack of consistent skill and knowledge across loan modification staff.

*Creation of a specialized, highly trained and certified staff to process loan mods.*

## Legal Services ProcessBreakthrough Roadmap

**Move From: **

- Generating loan documents when borrowers are not ready to close or take disbursement.

***Move To:***

***To achieve breakthrough performance in Legal Services, we must ...***

*A policy and system that supports creation of “holding queues” and electronic storage of documents to accommodate variable borrower and timeframes “just-in-time” generation of loan documents.*

- Lack of simple system for tracking and executing title work.

*Integrated system with standard provisions for securing titles without the need for multiple touches and borrower interaction.*

- Underutilizing of field operations staff to close loans.

*Automated appointment scheduling system that assigns closers to maximize productivity.*

## What a Best-in-Class Process Looks Like and the Organization andSupport Required to Operate It.

**Innovating the Breakthrough Blue Print**

## The End-to-End Disaster Loan Process Value Stream

**The End-to-End Disaster Loan Process Value Stream**

**Process****Component**

**Critical****Input**

**Key Processing****Performance Drivers**

**Required****Output**

**Critical****Customer****Hand-Off**

**APPLICATION****PROCESS**

**Electronic application linked to loan processing system**

**Robust self-help and staff assistance to guide borrowers through the process**
**Built-in mistake proofing in application**
**Ability to link al file related documents to application**

**Complete, accurate applicant file ready for approval decision processing**

**Loan approval case manager**

**LOAN****APPROVAL****PROCESS*****(Including loss verification)***

**Complete, accurate applicant file ready for approval decision processing**

**Automated upfront processing of unsecured loans up to $50K**
**Two-track approval processing automated for unsecured up to $50K; loan officer case driven for all others.**
**Batch processing of applicant files categorized by complexity**

**Fair, within policy decision to approve loan or decline application**

**Loan             disbursement case manager**

## The End-to-End Disaster Loan Process Value Stream (cont’d)

**The End-to-End Disaster Loan Process Value Stream *****(cont’d)***

**Process****Component**

**Critical****Input**

**Key Processing****Performance Drivers**

**Required****Output**

**Critical****Customer****Hand-Off**

**Complete, accurate approved loan file ready for disbursement**

**DISBURSEMENT****PROCESS**

**Delivery of complete loan package including deed at start of disbursement**
**Incoming qualification of borrower as ready to receive funds**
**Ability to make non-financial file changes/updated without going to loan mod**
**Ability to fund title and insurance fees from loan proceeds**
**Simple hand-off for loan mods with rapid turnaround**

**Fully disbursed loan ready for transfer to servicing**
**Loan on hold pending borrower agreement to accept funds**

**Loan servicing**

## The End-to-End Disaster Loan Process Value Stream (cont’d)

**The End-to-End Disaster Loan Process Value Stream *****(cont’d)***

**Critical****Supporting****Processes**

**Critical****Input**

**Key Processing****Performance Drivers**

**Required****Output**

**Critical****Customer****Hand-Off**

**Qualified loan mod request *****(vs. a non-financial update or change to the loan file.)***

**(A) LOAN MODIFICATION PROCESS**

**Automated system for requesting, assigning and tracking loan mods**
**Establishment of specialized loan mod staff with certified skills and knowledge**
**Establishment of policy supporting single authority sign-off given loan mod specialist legal qualifications**
**90% of all mods supported with tested/pre-approved scripts**

**Completed loan mod to support loan closing or disbursement action**

**Loan disbursement case manager**

**Qualified request for specialized legal support.**

**(B) LEGAL SERVICES**

**Defined legal support services with clear process owners and service level standards**
**Automated request, queuing and tracking system**
**Clear cost/benefit case for maintaining each service in-house**

**Delivered legal service as requested within standard response time**

**Case manager or other qualified requester**

## Application Process Breakthrough Redesign Map

**Lean****Process****Flow**

**Enabling****Tools/****Concepts**

- No requirement for “wet” signature on application

**Issues****for****Resolution**

**Application Process Breakthrough Redesign Map**

- Service level agreement with IRS

**INPUT**Disaster Event

- CoordinateDisasterEventResponse Plan

**1**

- Satellite survey of damage/ quick size-up

- Move loss verification to loan approval process

- ProcessElectronicApplications

- ObtainCreditReport

- ObtainIncomeData

- ImportOtherData

- ProcessAutoDeclines

- Complete, qualified applicant file ready for approval processing

**2**

**3**

**4**

**5**

**6**

**OUTPUT**

- Immediate proactive coordination with other agencies, states, local Gov. “push” communication to victims on SBA support & processes

- Multiple access charters – online phone assisted, in person- paper as last resort.

- Bar coded application extended to all supporting documents.

- Automaticinterface.

- Automaticinterface.

- Automaticinterface.

- Automaticinterface.

## Application ProcessBreakthrough Roles & Responsibilities Map

- LoanApplicant

- Field OperationsSupport

- National CallCenter Support

- Central ProcessingSupport

- SystemSupport

- Other ServiceSupport

- HDQ/CommandCenter

- ProcessRoles

- ProcessSteps

**1**

- Coordinate Disaster Event Response Plan

**2**

- Process ElectronicApplications

**3**

- Obtain CreditReport

**4**

- Obtain IncomeData

**5**

- Import OtherData

**6**

- Process AutoDeclines

- 1.1 Complete survey assessment/ recommend plan/ coordinate

- 1.1 Pre-position resources

- 1.1 Pre-position resources

- 1.2 Approve plan/ support coordination

- 2.1 Completeapplication

- 2.2 Provide on-site assistance

- 2.3 Provide telephone assistance

- 2.4 Provide case mgr support as needed

- 2.5 Mistakeproofentry

- 3.2 Monitor interface for problem cases

- 4.2 Monitor interface for problem cases

- 5.2 Monitor interface for problem cases

- 6.2 Monitor interface for problem cases

- 3.1 Run automated interface

- 4.1 Run automated interface

- 5.1 Run automated interface

- 6.1 Run automated interface

## Application Process                                                                                   Breakthrough Efficiency Analysis

**Application Process                                                                                   Breakthrough Efficiency Analysis**

**Redesigned****Process Step**

- Coordinate Disaster Event Response Time

- *TARGET CYCLE TIME= Projected elapsed time redesigned process will deliver

**Target Cycle Time****to Complete ***

**Budgeted Human****“Touch Time” ****

- 2 – 4 daysper event

- 2 – 4 daysper event

- **BUDGETED HUMAN  “TOUCH TIME” = Projected staff time to complete the redesigned process.

**Note: The redesigned application process delivers disaster victim data to the loan approval process where more value is added.**

- Process ElectronicApplications

- Obtain CreditReport

- Obtain IncomeData

- Import Other
- Data

- Process AutoDeclines

- TOTALS

- 30 mins per application

- 30 mins *(if assisted)*

- automated

- automated

- automated

- automated

- 30 mins per application if assisted

- 1 day *(from application input to ready for approval)*

- 1 day *(from application input to delivery to PDC)*

- Pre-ApplicationIssue

- Post-ApplicationIssue

## Loan Approval Breakthrough Redesign Map

**Lean****Process****Flow**

**Enabling****Tools/****Concepts**

- No onsite loss verification for unsecured loans up to threshold

**Issues****for****Resolution**

**Loan Approval Breakthrough Redesign Map**

- Senior loan officer/loan officer case manager empowered to make file changes/updates

- Tiered automated unsecured loan approval levels

**INPUT**Complete accurate loan application

- AutomatedScreeningofApplications

- AutomatedProcessing

- Verify Eligibility

- Verify Loss

- Process theDecisionApprove orDecline

- CommunicatetheDecision

**OUTPUT**Approved Loan Ready for Disbursement/Application Declined with Reason and Referral if Appropriate

**1**

**2a**

**2b**

**3b**

**4b**

**5**

**6**

- Automated approval system for unsecured loans based on credit score, income and debt level.

- Batch assign Secured Loans for Case MgrProcessing

- Optimal batch categories and size to facilitate fast, error-free processing

- Onsite verification with applicants for secured loans

- Legal checklist for loan approval decisions

## Loan ApprovalBreakthrough Roles & Responsibilities Map

**Loan Approval****Breakthrough Roles & Responsibilities Map**

- LoanApplicant

- Field OperationsSupport

- National CallCenter Support

- System Support

- Other Specialized Support Services *(Legal, Mail, QA etc.)*

- HDQ/CommandCenter

- ProcessRoles

- ProcessSteps

**1**

- AutomatedScreening ofApplications

**2a**

- Automated Processing

**3b**

- Verify Eligibility

**4**

- Verify Loss

**5**

- Process the Decision: Approval or Decline

**6**

- Central Processing Support

- CommunicateDecision

- Loan Approval

- 3.b 2	Provide additional info as needed.

**2b**

- Case Mgr. Processing

- 3.b 3	Provide local support as needed.

- 4.b 1	Supporton siteverification

- 4.b 1	Conducton siteverification

- 2.b 1 Loan secured files. Files assembled in batches

- 3.b 1 Initialreviewand assessment

- 1.1 Files segmented into queues for processing

- 2.a1 Automated processing of unsecured loans

- 5.1 Make recommendation

- 5.2 Perform single pass reviews

- 6.2 Provide outbound borrower contact to ensure satisfaction with process and confirm readiness to accept funds

- 6.1 Automated Approval/ Decline notification

- Loan ApprovalSupervisor *(Legal Authority)*

## Loan Approval ProcessBreakthrough Efficiency Analysis

**Loan Approval Process****Breakthrough Efficiency Analysis**

**Redesigned****Process Step**

- Automated Screening of Applications

- Automated Processing for Unsecured Loans

- Batch Assign Secured Loans for Case Mgr Processing

- Verify Eligibility for Secured Loans

- Verify Loss for Secured Loans

- Process the Decision: Approve or Decline

- *TARGET CYCLE TIME= Projected elapsed time redesigned process will deliver

**Target Cycle Time****to Complete ***

**Budgeted Human****“Touch Time” ****

- 1 day

- **BUDGETED HUMAN  “TOUCH TIME” = Projected staff time to complete the redesigned process.

- Communicate DecisionAll Loans

- 1 day

- 1 – 5 days

- 1 – 4 days

- 1  day *(Home)*1 – 2 days *(Bus)*

- 1 day

- TOTALS: Unsecured Loans

- TOTALS: Secured Loans

- 3 days

- 5 – 13 days *(Home)*5 – 14 days *(Bus)*

- —

- 15 – 45 mins

- automated

- 2 – 3 hrs

- 2 hrs *(Home)*4 – 6 hrs *(Bus)*

- automated

- automated

- 4 – 6 hrs *(Home)*6 – 10 hrs *(Bus)*

- —

## Disbursement Process Breakthrough Redesign Map

**Lean****Process****Flow**

**Enabling****Tools/****Concepts**

- Assignment of limited power of attorney by borrower to SBA to facilitate loan document changes

**Issues****for****Resolution**

**Disbursement Process Breakthrough Redesign Map**

- Ability to fund title insurance fees from loan process.

**INPUT**

- Prepare toDisburse

**1a**

- Dedicated case manager for loan disbursement supported by legal services and other support groups.

- Lower threshold for receipts submittal by borrower for subsequent disbursements.

- Close the Loan and ScheduleDisbursement

- Disburse Funds

- Close OutDisbursement

**2**

**3a**

**4**

**Approved, complete loan package and “ready” borrower**

- Manage Exceptions/Mods

**1b**

- ManageExceptions/Mods

**3b**

- Case managers organized in teams by loan classifications

- Hand-off to specialized loan mod team for rapid turnaround

**OUTPUT**

**Loan File ready for Transfer to****Processing**

## Disbursement ProcessBreakthrough Roles & Responsibilities Map

**Disbursement Process****Breakthrough Roles & Responsibilities Map**

- LoanApplicant/ Borrower

- Field OperationsSupport

- National CallCenter Support

- System Support

- Other Specialized Support Services *(Legal, Mail, QA etc.)*

- HDQ/CommandCenter

- ProcessRoles

- ProcessSteps

**1a**

- Prepare to Disburse

- Central Processing Support

- DisbursementCase Mgr.

- 2.1 Sign closing documents.

- Supervisor *(Legal Authority)*

**2**

- Close & Schedule Disbursement

**1b**

- ManageException Mods

- 2.1 Assist in closing.

- 2.1 Assist in closing needed.

- 1.2 Review file & contact borrower & manage any issues

- 1.b *(Process loan Mod as requested)*

- 3.1a Manage Issues

- 3.2a Provide Support

- 3.3 Auto-generatedisbursements

- 3.b *(Process loan Mod **as requested)*

- 4.1 Close File

- 4.2 Auto-transfer to loan servicing

- 1.1 Assign file

- 1.3 Prepare closing documents

## Disbursement ProcessBreakthrough Efficiency Analysis

**Disbursement Process****Breakthrough Efficiency Analysis**

**Redesigned****Process Step**

- Prepare to Disburse

- Close Loan & ScheduleDisbursement

- Disburse Funds

- Close-OutDisbursements

- *TARGET CYCLE TIME= Projected elapsed time redesigned process will deliver

**Target Cycle Time****to Complete ***

**Budgeted Human****“Touch Time” ****

- 1 day

- **BUDGETED HUMAN  “TOUCH TIME” = Projected staff time to complete the redesigned process.

- 1 day

- 1 day

- 15 min to 1 hr

- 2 – 4 hrs

- 15 min

- 1 day

- 30 mins

## Loan Modification Process Breakthrough Redesign Map

**Lean****Process****Flow**

**Enabling****Tools/****Concepts**

- Creation of two new positions: Lean mod Specialist with legal sign-off authority on scripted mods

**Issues****for****Resolution**

**Loan Modification Process Breakthrough Redesign Map**

- Authority to handle non-financial file changes/updates delegated to case managers *(as noted in approval process)*

**INPUT**Qualified Need for Loan Mods

- Mod RequestReceived &Assigned forAction

**1**

- Scripting of mod actions based on best practice.

- Ability to suspend loans in lieu of cancellation designation to accommodate borrower needs.

- RequiredModActionCompleted

- QualityAssuranceReview

- DocumentGeneration andReturn toRequester

- Modified LoanReady forProcessing

**2**

**3**

**4**

- Loan mod Specialist with legal sign-off on Non-Scripted mods

**OUTPUT**

- Built-in guidance menus with mistake proofing

- Integrated system request queuing, assignment and tracking screens

- Loans mod backlogs worked separately by “swat team”

- Organize specialists in teams to leverage different skills and knowledge.

## Loan ModificationBreakthrough Roles & Responsibilities Map

**Loan Modification****Breakthrough Roles & Responsibilities Map**

- Loan modRequester *(Case Mgr)*

- Loan modSupervisor

- Loan modSpecialist

- LegalServices

- ProcessRoles

- ProcessSteps

**4**

- Document Generation &Return to Requester

- LossVerificationServices

- 2.1 Sign closing documents.

**2**

- Required ModActionCompleted

**1**

- Mod Request Received & Assigned

**3**

- QualityAssuranceReview

- SystemSupport

- 1.1 Qualified mod request submitted

- 1.2 Reviewed & assigned for action

- 1.3 File assigned to specialist entered into tracking system

- 2.3 Handle non-scripted mods

- 2.2 Review assignment and expected scripted action

- 2.2 Provide support if needed

- 2.2 Provide support if needed

- 2.4 Track status of all mods

- 3.2 Investigate & resolve variances

- 3.1 Record action/issue alert on variances

- 4.1 System generates documents & sends alert on mod completion

## Loan Modification ProcessBreakthrough Efficiency Analysis

**Loan Modification Process****Breakthrough Efficiency Analysis**

**Redesigned****Process Step**

- Mod Request Receivedand Assigned

- Required Mod ActionCompleted

- Quality AssuranceReview

- Document Generation andReturn to Requester

- *TARGET CYCLE TIME= Projected elapsed time redesigned process will deliver

**Target Cycle Time****to Complete ***

**Budgeted Human****“Touch Time” ****

- 5 mins

- **BUDGETED HUMAN  “TOUCH TIME” = Projected staff time to complete the redesigned process.

- 1 – 3 days

- automated

- 5 mins

- 1 hr

- 5 min – 1 hr

- TOTALS

- 5 mins – 1 hr

- automated

- 1 day – 3 days max

- 1 – 2 hrs max

## Legal Services Breakthrough Redesign Map

**Lean****Process****Flow**

**Enabling****Tools/****Concepts**

- Delegate authority to legal staff *(paralegal & assistants)* to make non-financial file/document changes.

**Issues****for****Resolution**

**Legal Services Breakthrough Redesign Map**

- Fund external legal services fees through loan proceeds

**L1**DocumentGeneration

- Eliminate PALs system and track productivity through DCMS

*Streamline Centralized Legal Services to 5 Core Processes*

**L2**TitleDesk

**L3**CheckOrdering

**L4**FOIA

**L5**FileForwarding

- Eliminate collateral processing by scanning all docs.

- Transfer responsibility for legal response to Buffalo.

- Transfer appointment setting and closing to field offices.

- Automate all legal services to the fullest extent

## Legal Services Redesign Example:Document Generation

**Legal Services Redesign Example:****Document Generation**

**“****AS IS” PROCESS**

**BREAKTHROUGH PROCESS**

**Case Mgr contacts borrower for additional info needed to generate documents**

**Typist receives files in queues and prepares docs.**

**Proofer receives files and corrects any errors.**

**Assembler receives hard copies of docs and assembles for mailing to appointment  center.**

**Paralegals/****assistants contact borrower to set appointment.**

**Automated document checklist created based on stipulation of loan file.**

**Scripted documented automatically printed.**

**Hard copies printed and assembled in closing office.**

**1**

**2**

**3**

**4**

**5**

**1**

**2**

**3**

## Summary Comparison of End-to-End  “As Is” vs. Breakthrough Process Efficiency Analysis

**Summary Comparison of End-to-End  “As Is” vs. Breakthrough Process Efficiency Analysis**

**“****As Is”****Process Segment**

- Application and Verification *(Post Application Issue)*

- Loan Approval

- Disbursement (to initial disbursement)

- TOTAL “AS IS” END-TO-END PROCESS

**Est. End-to-End****Cycle Time**

- 2 days - 21 days

- 1 day  – 21 days

- 3 days – 32 days

- 1 days – 26 days

- Loan Modification Process

**Ave. Est. ****“Touch Time”**

- 4 hrs

- 6.5 hrs

- 5 hrs

- 1 – 11.5 hrs

**Breakthrough****Process Segment**

- Application *(No Verification)*

- Loan Approval*(Including Verification)*

- Disbursement (to initial disbursement)

**Est. End-to-End****Cycle Time**

- 1 day

- 3 days – 14 days

- 4 days

- 1 day

- Loan Modification Process

**Ave. Est. ****“Touch Time”**

- 30 mins

- 4 – 10 hrs

- 3 – 6 hrs

- 1 -2 hrs

- 6 days – 74 days

- 15.5 hrs

- TOTAL REDESIGNEDEND-TO-END PROCESS

- 8 days – 14 days

- 7.5 – 16.5 hrs

## Framework for End-to-End Disaster Loan Organization to Support Breakthrough Performance

**Customer****Service****Teams**

**Production****Support****Teams**

**Shared****Service****Teams**

**Framework for End-to-End Disaster Loan Organization to Support Breakthrough Performance**

- Command Center

- DisasterCoordination

- ScenarioPlanning

- Budgeting

- PerformanceReporting

- Etc.

- Loan Disbursement Team*(Case Mgrs organized by loan types)*

- Loan Approval Team*(Case Mgrs focused on complex secured loans)*

- Loan Application Team*(Case Mgrs focused on borrowers with special needs)*

- HAND-OFF

- HAND-OFF

- LossVerification

- LegalServices

- LoanModification

- DCMS

- Call CenterSupport

- Field OperationsSupport

- Mail

- Hiring &Training

- QualityAssurance

- EmployeeServices

- PolicyMgmt

- Etc.

## Proposed End-to-End Organizational FrameworkPotential Benefits and Issues

_**BENEFITS**_

- +	Provides way to create and maintain alignment across all ODA operations.
- +	Focal point for anticipating problems and leveraging opportunities.
- +	Clearing house for policy, technology and process changes.

**Proposed End-to-End Organizational Framework****Potential Benefits and Issues**

_**ISSUES FOR RESOLUTION**_

**Planning****&****Coordination****Team**

- Membership?
- Frequency of meetings?
- Decision-making process?

- +	Provide end-to-end ownership of the customer.
- +	Creates a core cadre of skilled staff that is empowered to keep the process flowing for every customer.

**Customer****Service****Teams**

- How to manage hand-offs?
- Qualifications?
- Staffing levels?

- +	Provides focal point for specialized skill and functional area support.
- +	Makes it easier to flex up or down to meet demand.
- +	Facilitates measurement of service levels and productivity.

**Production****Support****Teams**

- How to maintain high responsiveness to customer?
- Where to locate teams?
- How to manage service delays or gaps.

- +	Provides focal point for common service needs across the organization.
- +	Makes it easier to standardize best practices.
- +	Leverages technology and expert resources.

**Shared****Services****Teams**

- How to balance centralization vs. decentralization?
- How to monitor service quality?

## Proposed Rapid Improvement Campaign Action Plan

**Controlling for Rapid, Risk-Managed Implementation**

## Rapid Improvement CampaignRoles & Responsibilities

**CAMPAIGN SPONSOR**

- Executive sponsor or member of the campaign board. Provides advice and advocacy for the Rapid Action Team and/or Leadership Decision Projects and is ultimately accountable for seeing that the team produces results.

**RAPID ACTION TEAM LEADER**

- Coordinates and manages Rapid Action Team’s schedule and deliverables, leads weekly team meetings.

**RAPID ACTION TEAM MEMBER**

- Participates on Rapid Action Team by contributing ideas and taking responsibility to “champion” at least one priority idea into action. Attends weekly team meetings.

**LEADERSHIP DECISION PROJECT CHAMPION**

- Leads the completion of a leadership decision project. Reports progress on a weekly basis to Campaign Board.

## End-to-End Disaster LoanRapid Improvement Campaign - Overview

**End-to-End Disaster Loan****Rapid Improvement Campaign - Overview**

**CAMPAIGN****BOARD**

**RAPID****ACTION****TEAMS**

**LEADERSHIP****DECISION****PROJECTS**

- Meets as needed to approve major policy changes and review requirements.

- Preston, Carranza, Mitchell, Rea, and *(CFO, CIO, OGC, and OIG as needed)*

- Meets weekly to update all campaign activities and maintain momentum.

- Rivera, ODA Center Leaders, DCMS, Policy, PASC

- Small teams of 5 – 8 individuals meet weekly to execute focused improvement charters over 60-90 days.

- Cross-ODA participation

- Individuals assigned to complete due diligence on specific “just do it” quick improvements.

- Cross-ODA participation

## End-to-End Rapid Improvement Campaign:Leadership Decision Project Proposals*

- Develop plan and implement immediately *(within 30-days)*

- E.	Begin scanning all documents to eliminate need for collateral processing.

- Develop plan and implement immediately *(within 30-days)*

- D.	Allow funding of loan expenses out of loan proceeds to eliminate time and cost of processing customer checks.

- Develop plan and implement immediately *(within 30-days)*

- C.	Move loss verification step to after conditional approval to eliminate cost and time wasted on unnecessary verification.

- Develop plan for approval *(within 30-days)*

- B.	Eliminate the need for a wet signature at submission of loan application to speed processing and reduce rework downstream.

- Develop plan and implement immediately *(within 30-days)*

- A.	Empower case managers *(and others accessing loan files)* to make non-financial updates to DCMS file without need for a modification to speed processing and reduce loan mod backlog.

*** These are opportunities for immediate action to be carried out by one or two individual champions in the next 30 to 60 days.**

**Executive Sponsor****Support/Comments**

## End-to-End Rapid Improvement Campaign:Leadership Decision Project Proposals* (cont’d)

- J.	modify requirements for receipts from 80% of the disbursement to 50% to reduce burden on borrower and to speed disbursements.

**End-to-End Rapid Improvement Campaign:****Leadership Decision Project Proposals* ****(cont’d)**

*** These are opportunities for immediate action to be carried out by one or two individual champions in the next 30 to 60 days.**

- Research how to execute without increasing compliance risks, push-up to H. Mitchell for action. (within 60-days)

- I.	Eliminate need for on-site-loss verification on personal property loans by using desktop, self-verification or other means.

- Research how to do it without raising data security concerns and push-up to S. Preston for action*. (within 60-days)*

- H.	Negotiate with IRS to get direct electronic data for loan application.

- Tie to Rapid Action Team focused on new mod process *(test within 90-days)*

- G.	Eliminate need for rule of 2 reviews on loan mods by moving to loan mod specialist approach with financially legal expert assist when necessary.

- Develop recommendation test for any compliance issues and implement *(within 60-days)*

- F.	Allow auto approval on loans based on credit scores after eligibility is determined.

**Executive Sponsor****Support/Comments**

## End-to-End Rapid Improvement Campaign:Leadership Decision Project Proposals* (cont’d)

*** These are opportunities for immediate action to be carried out by one or two individual champions in the next 30 to 60 days.**

- Research going to 2 to 3 suppliers with standard process for all.

- N.	Develop RFP to operate with one preferred title company to reduce cost and variability.

- Research cost/benefits, propose and implement *(within 60 days)*

- M.	Authorize SBA to pay for vesting up front at eligibility review.

- Research further and propose plan that avoids any statutory compliance conflicts or offer proposal to change statues *(within 60-days)*

- L.	Change SBA classification on referrals to FEMA/State from being labeled “declined for credit” to an alternative that acknowledges positive SBA action/change SOP and reporting references on “loan cancelled to more accurate classification such as “loan in suspense, loan inactive, loan deactivated.

- Research further and propose options that move in the same direction. *(within 60-days)*

- K.	Increase the unsecured loan threshold to $50K to speed response/funding to credit worthy borrowers.

**Executive Sponsor****Support/Comments**

## End-to-End Rapid Improvement Campaign:Rapid Action Team Opportunities*

*** These are opportunities for action over the next 90 days to be executed by 5 to 8 person teams.**

- G.	Develop the scripts, job descriptions and tools needed to deploy title loan mod specialist approach *(“One and Done!”)*

- F.	Simplify and rewrite SOPs to align with the new process.

- E.	Develop the hiring, training and certification plan including position descriptions and quality assurance methods and tools to support the new process.

- D.	Complete full documentation and integration of the new end-to-end process components, develop the organization and staffing structure to support it, and then test it on a limited scale.

- C.	Develop and test the electronic loan application and how to integrate it into the new process for seamless, error-free operation.

- B.	Investigate and develop the plan to fully leverage the capabilities of the Field Offices to support the goals of the new End-to-End Disaster Loan Process.

- A.	Investigate and develop the plan to fully leverage the capabilities of the Buffalo Call Center to support the goals of the new End-To-End Disaster Loan Process.

## End-to-End Rapid Improvement Campaign: Rapid Action Team Opportunities*

*** These are opportunities for action over the next 90 days to be executed by 5 to 8 person teams.**

- L.	Complete the end-to-end process scorecard and develop operational model to begin tracking performance including drop-down on process metrics for turn times, touch times and cost.

- K.	Research and benchmark best practices of other “best in class” high volume transactional organizations and recommend how to
-       Implement into the new process.

- J.	Review, consolidate and prioritize all DCMS change requirements to support the new process; develop clear resource and budget proposal for completion points in 30, 60, 90 and 120 days.

- I.	Review policy charges needed to support new process; develop new policy guidance; and develop plan for clear, effective communication of changes down and across the end-to-end organization.

- H.	Review all loan documents *(including legal)* for opportunities to simplify, standardize and error-proof.

## End-to-End Improvement Campaign:Action Proposal Bank

- Automate the Credit Elsewhere Test on the home loans.
- Investigate the use of online closing statements.
- Develop a single disaster mortgage document.
- Review the statutory requirements for legal involvement in loan disbursement process.
- Use debit cards for loan disbursements.
- Explore feasibility for satellite review for loss estimates/assessments.
- Accelerate the Pat Rea “Google auto-data population” strategy.

## Proposed Team Structure to Support Executionof Leadership Decision and Rapid Action Opportunities

**Proposed Team Structure to Support Execution****of Leadership Decision and Rapid Action Opportunities**

**APPLICATION****PROCESS****RAPID ACTION TEAM**

**LOAN APPROVAL****PROCESS****RAPID ACTION TEAM**

**DISBURSEMENT AND****LOAN MODIFICATION****RAPID ACTION TEAM**

**LEGAL SERVICES****RAPID ACTION TEAM**

**TECHNOLOGY****SUPPORT****RAPID ACTION TEAM**

**POLICY & SOP****REVISION SUPPORT****RAPID ACTION TEAM**

**EMPLOYEE****CAPABILITIES****RAPID ACTION TEAM**

## End-to-End Rapid Improvement Campaign:Proposed Milestones and Calendar

- Review and comment on End-to-End Jumpstart Report

- End-to-End Rapid Improvement Campaign:Proposed Milestones and Calendar

_**PARTICIPANTS**_

_**TARGET DATE**_

- All Jumpstart EventParticipants

- By 1/19/07

- 2.	Convene meeting to prioritize actions and select Champions and Rapid Action Teams.

- Campaign
- Board

- Week of1/22/07

- 3.	Launch first wave of Leadership Decision Projects and Rapid Action Teams.

- Campaign Board and selected “Wave I” participants

- Week of1/29/07 and 2/5/07