Tax Cert Sales Define Phase Tollgate Green Belt Candidate: Audrey Hopkins Project Manager: Tom Steinker Date: March 1, 2012 Agenda Produce a Project Charter Document High level process Conduct VoC Next Steps Lean Six Sigma Green Belt Training 2 D M A I C Project Charter: Bank Loan Process Project Business Case: Project Goal Statement: The Bank may lose lien position on properties for secured Home Equity accounts whose tax certificate is bought at auction. We were at risk of losing $13 million in property values last year in one HOST system alone. The total value of taxes and associated expenses incurred was $4.2 million. In the last month we lost $221,567.58 in account balances. Additionally, there are OCC foreclosure procedures impacted by this process. Goal 1: Reduce the number of times the bank incurs a property loss by 80% from a average of 5/month to 1/month. Problem Statement: Project Timeline: If the property owner does not redeem the property by paying the back taxes, fees, assessments and penalties owed before expiration of the redemption period, and the investor chooses to proceed with foreclosure action, the property will be sold at auction for the amount of tax liability or some minimum value as placed by the Taxing Authority. In 2011, the bank paid out 1.1 million dollars in taxes and fees for 148 accounts in one HOST system (FDR) alone. Financial Impact: Estimated annualized lost value of account balances based on year to date is 2.65 million. Benefit Category: Cost Avoidance. Define 2/2/12– 2/29/12 Measure 3/1/124/1/12 Analyze 4/1/124/15/12 Improve 4/16/125/1/12 Control 5/1/125/15/12 Project Risk Assessment: Identified Risks: Possible causes outside of department and influence; multiple geographic locations; and lack of data. Risk Mitigation Plan: Include stakeholders in the project; use SMEs from multiple geographic locations; and we have already started to collect data. Project Scope: Team Roles: Current Scope: Limited only to loss by tax sale notice Secured home equity accounts serviced in Brecksville. Project Sponsor – Steve Cory, SVP, Executive Sponsor, Tom Steinker, VP Default Management, Working Sponsor Process Owner – Kathy Prorock, Manager Real Estate Out of Scope: First Mortgage (Miamisburg) Green Belt – Audrey Hopkins Mentor – Janet Malecki Core Team Members – Emily Kinzig, Vahn Knight Subject Matter Experts (SMEs) – Pat Wickham, Mary Lucyk, Rhonda Phelps Stakeholders – Steve Cory, EVP Lending Services, Adam Lean Six Sigma Green Belt Training Vidmar, Finance PM, Default Management 3 D M A I C Project Risk Assessment - Bank Loan Process Areas of highest risk involve “possible causes outside of department and influence”, “multiple geographic locations”, and lack of data. Mitigation for “out of department” causes is to include both up and downstream stakeholders in the project. Mitigation for risk associated with multiple geographic locations is to have one representative from representative location assigned to the project as subject matter experts. Mitigation for lack of data is to establish ongoing data collection mechanism which will continue through Control Lean Six Sigma Green Belt Training 4 D M A I C SIPOC - Bank Loan Process Supplier • Tax Lien Investor (usually through attorney) • Branch Office Input Process Output Customer • Legal Notice (US • Equity analysis • Equity Analysis • Customer Letter mail, Branch office) • Bank decision • Satisfy taxes and/or fees on behalf of customer • Loan Centers • County • Loan Borrower • County • US Post Office Borrower goes delinquent on taxes County arranges for sale Receive summons & complaint or sales notice Research validity of cost and fees Contact the Borrower Perform equityFinal Decision analysis We are at risk from external Third Parties because part of the process resides outside our control Lean Six Sigma Green Belt Training 5 D M A I C Voice of the Customer CTQs - Bank Loan Process CUSTOMER VOICE DATA PRIORITY Default Management I want to reduce amount of times we lose property Y Default Management I want to avoid third parties buying the taxes Y Real Estate Foreclosure Team I want to receive notice of sale on time X Real Estate Foreclosure Team I want minimal FTE impact Not Critical To Project CTQ Secure lien position SPECIFICATION No more than 1 missing notice/month impact Receive notification prior to sale Timely notification Have at least 1 week’s notice before the sale Staffing level 0 new hires Reduce the number of times the bank incurs a property loss Lean Six Sigma Green Belt Training 6 Next Steps Measure Phase Create detailed current state process Conduct Measurement Systems Analysis Determine Baseline (Y) Lean Six Sigma Green Belt Training 7