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Ellie Mae comes of age: founded in late 1998, Ellie Mae survived the dot-com crash and achieved profitability in January 2002. What''s behind this broker-friendly firm''s success? (Cover Report: Broker/Wholesale).

Article Excerpt
DONALD STARKS, PRESIDENT AND CHIEF executive officer of D.C. Starks Mortgage Associates Inc., Bourbonnais, Illinois, is quick to admit he's "not a tech person." Yet he enthuses over Pleasanton, California--based Ellie Mae Inc.'s ePASS[R] Business Center. "It saves steps," Starks says. "You just put the [loan application] information in one time."

ePAS S--electronic processing and submission system--connects originators, wholesale lenders, settlement service providers and mortgage investors on an Internet-based platform. Starks will run 95 percent of his firm's estimated 2002 production of $110 million through the system.

"There's no doubt it's reduced costs," adds Starks.

His three processors "can handle many more files" by ordering a credit report on ePASS, then uploading information from his Genesis 2000[R] loan origination system (LOS) to a wholesale lender, and on to Fannie Mae's Desktop Originator[R] or Freddie Mac's Loan Prospector[R] automated underwriting engines for near-instantaneous file approval.

Starks was a founder of the Illinois Association of Mortgage Brokers and is its current president. "I've been in this business 40 years," he says. "I've seen a lot of things come and go."

Observers of mortgage technology have seen numerous highly touted high-tech companies leave the marketplace over the years. However, Ellie Mae's business has boomed. Transactions performed over the system climbed from 30 in January 2001 to almost 450,000 in August 2002 (see Figure 1). According to Sig Anderman, Ellie Mae's co-founder and chief executive officer, the firm, which was founded in late 1998, achieved profitability in January 2002.

One key to its success has been in building an almost-captive customer base. Ellie Mae has done so by purchasing two of the primary loan origination systems used by mortgage brokers--Genesis 2000 Inc. and Contour Software. Links then were built so that LOS data could be sent to other firms working on a loan, such as credit repositories and wholesale lenders.

Currently more than 250 settlement service firms and 200 lenders are available on ePASS, according to Ellie Mae. CBC Companies, Columbus, Ohio, provides a range of settlement services and has been on Ellie Mae's system for almost two years. "They do a good job of marketing to brokers, so it behooves us to be on the link," says CBC Interface Coordinator Bob Evely.

"Eight [percent] to 10 percent of our clients access us through Ellie Mae," says Dave Vinson, chief sales officer at Factual Data Corporation, Loveland, Colorado. "That's huge," he adds. "Our technology partnered with theirs allows us to do some unique [online] applications," Vinson says. Factual Data guarantees "four hours or free" on credit report trade-line updates over Ellie Mae.

Pasadena, California-based IndyMac Bancorp Inc. was rated by Internet quality measurement firm Gomez Inc., Waltham, Massachusetts, as having the nation's second-best Internet...

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