Local Links: A 30-second answer for your home loan

by Heather Cocks
Austin American-Statesman
Monday, October 11, 1999

ARC Systems Inc. was founded 15 years ago, but it took until 1997 to find its niche and settle into it.

Founder Ed Jones created ARC Systems as a software company that custom-made programs to solve clients' special needs. But after six years of working with a mortgage company to streamline the application process, Jones realized he had stumbled onto something with staying power.

"In business, you need high-speed decision-making," Jones said. "But without it, you won't be playing the game any more. And the lending industry historically has not utilized technology."

So two years ago, Jones reorganized ARC Systems, turning it into a company that makes software enabling lenders to give online loan pre-approvals -- in 30 seconds or less.

Home loans that originate with online applications are expected to surge from $25 billion to $150 billion by 2003, according to Forrester Research Inc. To get those loans, borrowers have had to wait through a pre-approval process that takes anywhere from 24 hours to 3 weeks -- a pain for borrowers and lenders, who lose clients if another company can push the paper faster.

Jones says ARC Systems' software has eliminated that problem, and lenders seem to agree. Without spending a dollar on marketing, ARC Systems has inked 12 contracts with major lenders in the past six months alone, most recently with the Option One subsidiary of H&R Block Inc. In all it has 19 clients; others include Loancity.com, Mortgage.com and Lending Tree Inc.

Jones said the strength of his company's LendTech 2000 software, dubbed LT2K, is its ability to deal with sub-prime loans -- loans for people with shaky credit ratings. The software streamlined the process of pulling credit reports and matching them to lenders' criteria, Jones said.

At the lender's Web site, users fill out a specialized application that the site then ships to an ARC Systems computer in Austin. After weighing the information against the particular lender's criteria, the machine returns a decision.

Besides eliminating the waiting period, ARC Systems' software provides a consistency that can be tough to find when people are the ones processing applications, according to company marketing manager Mary Tipps.

"All (underwriters) have good days and bad days, and it takes a real pro to separate that from their work," Tipps said. "This way, it doesn't matter if it's 'Beer Thursday' or a Monday morning. The answer is the same, over and over again."

ARC Systems Inc.

Founded: 1984; switched company focus and incorporated in August 1997.

What: Makes software that consumers use to apply online for sub-prime mortgages or other credit-based loans, receiving pre-approval or denials in 30 seconds or less.

Address: 5316 U.S. 290 W.

Employees: 19

Web site: www.arcsystems.com