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Edward N. Jones President/CEO ARC Systems 2600 Via Fortuna #500 Austin, Texas 78746

Edward N. Jones President/CEO ARC Systems 2600 Via Fortuna #500 Austin, Texas 78746 (512) 892-5550 fax (512) 892-5552 www.arcsystems.com. MBA Subprime Lending and Alternative Products Conference  May 13, 2004. LendTech™ - System Overview. Capabilities Automated Underwriting

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Edward N. Jones President/CEO ARC Systems 2600 Via Fortuna #500 Austin, Texas 78746

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  1. Edward N. Jones President/CEO ARC Systems 2600 Via Fortuna #500 Austin, Texas 78746 (512) 892-5550 fax (512) 892-5552 www.arcsystems.com MBA Subprime Lending and Alternative Products Conference  May 13, 2004

  2. LendTech™ - System Overview Capabilities • Automated Underwriting • Multiple Lenders / Guidelines / Programs • Credit Report / 1700+ Attributes • Speed Of Decisioning – 30 Seconds • Pay-Off Optimization Process • Risk Based Pricing • Any Decisioning Process (With or Without Credit) • Lender Functionality / Working The Loan • Manual Review Of Loans • Stipulation Management • Pricing • Adaptable / Extensible • 7000+ Customizable Variables

  3. Sub-Prime & Beyond • Loan & Service Categories • GSE Eligible • Alt A & A- • Sub-Prime • HEL / HELOC • Combos • Warehouse • Loan Pools / MBS • Broker, Correspondent and Retail

  4. LendTech™ - Risk Based Pricing • Pricing Input (Automatically Loaded) • Secondary Marketing Direct • Real Time - Adjustments • Spread Sheets • Investor Guidelines / Rating Agencies • Adjustments • Originator / Zip / County • Branch P&L Adjustments • Lock Module (Request / Accept / Cancel) • Mandatory • Best Effort • Commitment Module (Max-Min Price / LTV, CLTV) • Master • Mini-Bulk

  5. Profit vs. Cost Center • Pass Through Transaction Costs • Reductions • Cost to Originate by 2/3rds • Increases • Production - 65% to 75% • Volume - 300% • Analytics • Maintain / Reduce Manpower Levels • Double Portfolio • Costs Less Than $250,000 / year

  6. Hidden ProfitsCustomer Provided Statistics • Lowest First Payment Default In Industry • Un-saleable Loans In Portfolio ~ Industry 11% • With LendTech™ = 0.25% • Increases • Production - # of Applications • 1,495 with 4 Loan Officers • Closing Ratio - 85% • Price Manipulation • By Broker • By Stipulation • And more…

  7. Current Statistics - 2003 • Since Inception - Over • 1.6 million applications • $194 Billion • Details for 2003 • $78.7 Billion • Highest Day • $2,698,890,595.93 • 13,377 Applications • Pools Processing • Pre-Bid ~ 1,850 apps / hr (w/o Credit Pulls) • Post Bid ~ 1,000 apps / hr (with Credit Pulls)

  8. YTD Processing Stats - 2003 Credit Reports 607,329 DU Import Files 103,028 Interface Triggers 1,598,202 Application Data Records 640,127 Faxes 240,292 Emails 92,803 Disclosures 78,701 Disposition Letters 26,633 XML Reports 14,302 Fraud Reports 152,135 Documents 10,789 Other Reports 1,275

  9. ARC Systems Volume

  10. Credit Interfaces * Interfaces Currently in Development

  11. Programmatic Interfaces * Interfaces Currently in Development

  12. Client Base Household - HSBC Lehman Brothers MLSG Home Loans PCFS Mortgage Resources SIB Mortgage Virginia Housing & Development Aurora Loan Services Deutsche Bank Ellington Group First Franklin Financial Corp. Franklin Financial Group Guaranty Bank Mortgage Division

  13. User Profile

  14. A new product offering from the company that developed the world’s best automated underwriting system.

  15. Revolutionary Automated Underwriting New evolution of the decisioning engine Full user control of: • Rules maintenance • Pricing • Stips • Credit attributes World Class, robust decisioning software • 12 seconds underwriting time for: • 150 combinations (products and pricing) • 7 Investors • Under 2 seconds underwriting time for individual products

  16. Benefits to Mid Tier Lenders • Control over: • Choice of Investors • Guidelines • Pricing • Stips • Yield Spread Premium • Submissions to Fannie Mae and Freddie Mac • Centralized control of Guidelines for products and pricing across all branches and offices • MISMO format export to existing Loan Origination System • Underwriting decision with credit parsing to your subprime credit grade program

  17. Benefits to Investors • Control pricing by: • Specific lender • City • State • Zip code • Underwriting decision with credit parsing to your subprime credit grade program

  18. Ability to Search All Products and Programs Select any and or all combinations of products and programs

  19. Search Results

  20. Comparing Pricing and Product Results

  21. Working a Loan Application Updating Pre-Qual Application Updating Pricing

  22. New Product Timing • Beta testing • 5 clients • Washington D.C., Houston, Dallas, and Austin • Ready for Market July 2004

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