Edward N. Jones President/CEO ARC Systems 2600 Via Fortuna #500 Austin, Texas (512) fax (512) MBA Subprime Lending and Alternative Products Conference May 13, 2004

LendTech™ - System Overview Capabilities Automated Underwriting –Multiple Lenders / Guidelines / Programs –Credit Report / 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

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

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

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

Hidden Profits Customer 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…

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

YTD Processing Stats Credit Reports607,329 DU Import Files103,028 Interface Triggers1,598,202 Application Data Records640,127 Faxes240,292 s92,803 Disclosures78,701 Disposition Letters26,633 XML Reports14,302 Fraud Reports152,135 Documents10,789 Other Reports1,275

ARC Systems Volume

Credit Interfaces * Interfaces Currently in Development

Programmatic Interfaces * Interfaces Currently in Development

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

User Profile

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

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 Revolutionary Automated Underwriting

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

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

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

Search Results

Comparing Pricing and Product Results

Working a Loan Application Updating Pre-Qual ApplicationUpdating Pricing

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