Controlling Cost is Saintly

Being a New Orleans native and returning to the States after eight years abroad converged rather nicely in spending Super Bowl Sunday with my family in my home town. And perhaps the most enjoyable parts of the Big Show, and in viewing the key components of the victory of the New Orleans Saints over the Indianapolis Colts, dealt with bold risk-taking mixed with the often under-promoted notion of control within an organization. Both teams utilized a large degree of control, however the Colts did so to the point of being too conservative, while the Saints felt so much confidence in their ability to control their own fates that they were then able to take great risks. Case in point, a field goal attempt by Colts kicker Matt Stover wobbled and cut left of the goal post when it appeared his foot struck the ground before the ball. For his part, the Saints’ Garrett Hartley kicked three 40+ yard field goals, a Super Bowl record, and each split the uprights. Total control. It wasn’t easy. The Saints getting stuffed on fourth and goal (tough to watch), pinned the Colts deep in their territory, forcing a three and out. From the ensuing punt, the Saints regained a decent enough field advantage to chip out another three points. An on-side kick to start the second half (the first time that’s been tried at the big show) lead to another scoring drive with short field position. “A fearless start to the second half,” the announcer said after the kick. And going for a two-point conversion right in the next Saints scoring drive brought the lead to seven. But the most incredible display of control was that of Saints defensive corner Tracy Porter, who fell back off Colts receiver Reggie Wayne as Indianapolis looked to tie late in the fourth. Quarterback Peyton Manning threw the ball and Porter, seemingly predicting the future, cut across the route and intercepted. He returned the ball 74 yards for a Pick Six and sealed the first Saints Super Bowl title. But Porter is no Nostradamus. In fact, he had waited for this opportunity for two weeks: “It was great film study,” Porter is widely quoted in the press. “We knew that on third-and-short they stack, and they like the outside release for the slant.” Not jumping the gun, to sell Manning on the open receiver, with EVERYTHING on the line is the result of effective control. The risk would be that Porter misses his chance, Wayne completes, runs it in and ties it up. But that didn’t happen. In fact, so much of risk is mitigated through control. In our March issue, reporter Austin Kilgore discusses ways in which servicers can modify costs in order to turn a profit. There are many ways to do this, but which are the most effective? To rely on traditional cost-cutting to earn profit no longer goes far enough. The only real way to deal with cost is to control it. And sometimes a team needs more than one player to do it. Sylvia Alayon, vice president of operations for the Florida due diligence firm Consumer Mortgage Audit Center, which just opened a new division to process loan modifications and refinancings says: “From a P & L perspective, reduction in cost are achieved with our ‘Pay as you go’ model. If you were to complete these services in house then you would also have to bear the fixed costs associated with performing these functions; not cost effective in a cyclical volume environment.” Alayon believes that operational efficiencies and prevention of potential losses are achieved by getting audit results quicker and addressing issues earlier rather than later. The ability to shift audit focus to meet current market needs and relying on the old game plan may not make fiscal sense. “Most lenders have a lengthy waiting time before they can implement any changes which either exposes them to additional liabilities or forces them to use manual processes that are manually intensive and costly,” Alayon adds. Playing it safe and waiting for things to happen is an old-school Colts strategy. Their playbook changed little for the Super Bowl, as Porter can attest, while the Saints mixed things up big time. But is outsourcing cost control set to become an industry standard? BSI Financial recently selected National Claim Filing (NCF) to electronically create, audit and file their Proof of Claims (POCs), according to David Cunningham, NCF CEO. The NCF system will enable BSI to fully automate the process of creating the POC and automatically file it with the bankruptcy court. BSI expects the point-and-click process to do this to reduce file preparation by 80%, compared to the way they do it now. “Our employees are valuable assets and we want to optimize the use of their time and talents,” said Gagan Sharma, president and CEO of BSI Financial. “NCF’s system will enable us to do that, while helping to ensure that each POC is filed accurately and in accordance with the unique requirements of each bankruptcy court.” Saints defensive coordinator Gregg Williams echoed this perspective when chatting to reporters after the Super Bowl. When he was asked about the Pick Six preparation, he responded: “That series of plays, trying to set up the route and hopefully set up the formation that they would call, it kind of fell into our place right there,” Williams said. “Players make plays like that, coaches don’t. I made the call, but Tracy made the play.” And to finalize the point on different strategies, consider that less than half of the 31 points scored in the Saints victory were the result of the game’s MVP, quarterback Drew Brees. The league’s 2009 MVP, Manning, was responsible for two of three scores by Indianapolis, on the other hand. In mortgage finance, like in the new era of football, it isn’t unwise to put the entire game on the back of the core performer. Just don’t assume you’ll be handed the victory.