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Sovereign Bancorp. Chooses ARC Systems' Automated Technology for Correspondent Lending

Bank's First AU Engine Will Meet New Pressure on Correspondents to Turn Loans More Quickly

San Francisco, California October 26, 2004 - ARC Systems of Austin, Texas (MBA Booth #1414), a leading mortgage automation provider, has reached an agreement with Sovereign Bancorp, Inc. (SOV), headquartered in Philadelphia, to automate their decisioning on purchases of closed loans by Sovereign Finance Company on a bulk and flow basis.

A Web-enabled platform for submitting loans will be established and is to include third-party compliance screening.

"This is Sovereign Finance Company's first automated underwriting engine and we expect its turnkey nature to streamline our correspondent lending operation and make it more efficient for our business partners," said Clifford A. Schultz, Senior Vice President, National Correspondent Lending at Sovereign Bank.

"Our goal is to supply our correspondent lending business partners with the speed they require. The only way to meet that requirement is to employ this advanced technology from ARC Systems," he added.

Ed Jones, President and Chief Executive Officer of ARC Systems, said "Sovereign is one of the top 20 banks in the country and joins another of our customers, Deutsche Bank, which is one of the top international financial institutions, further expanding our reach into the large bank arena."

Steve Jenkins, Vice President, Business Development, ARC Systems, added: "Our existing relationship with other clients like HSBC Mortgage Services enables us to accommodate the flow business and browser-based business of companies like Sovereign."

Sovereign Bancorp, Inc., is the parent institution to Sovereign Bank, a $65 billion financial institution with 535 community banking offices, nearly 1,000 ATMs and about 9,000 team members in Connecticut, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, and Rhode Island.

Sovereign Finance Company purchases on a servicing released basis closed first- and second-lien home equity and mortgage loans that are FICO, mortgage, and loan-to-value driven. The product offering provides consistent underwriting, competitive products and pricing, and world class customer service.

It is divided into five credit tiers, through which lenders sell loans to Sovereign Bank for their customers with FICO scores as low as 575 (customers may receive up to 100% loan-to-value funding starting at a FICO score as low as 640).

About Sovereign Bancorp

Sovereign Bancorp, Inc., ("Sovereign"), headquartered in Philadelphia, Pennsylvania, is the parent company of Sovereign Bank, a $65 billion financial institution with 535 community banking offices, nearly 1,000 ATMs and about 9,000 team members in Connecticut, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, and Rhode Island. In addition to full-service retail banking, Sovereign offers a broad array of financial services and products including business and corporate banking, cash management, capital markets, trust and wealth management, and insurance. Sovereign is one of the top 20 largest banking institutions in the United States. Sovereign Finance Company is a division of Sovereign Bank. For more information on Sovereign Bank, visit www.sovereignbank.com or call 1-877-SOV-BANK.

About ARC Systems

Founded in 1984, ARC Systems is a privately held company that provides lending institutions, investment and commercial banks across the nation with the power to make fast, accurate and consistent decisions at the point-of-sale for risk-based pricing and credit evaluation. Empowering financial institutions with the ability to make better business decisions, the company's proprietary, patent-pending, rules-based system is used by lenders to provide their customers, correspondents and brokers direct access to automated underwriting and online loan origination system functionality.