Companies that specialize in dealing with year-2000 readiness are receiving a steady stream of 911 calls from mortgage lenders. But some mortgage lenders are not saying much about their state of readiness.
"They have a refinance boom sitting at the front door right now and that's a lot more pleasant to deal with than the year-2000," said Larry G. Walker, executive director of the credit and real estate services division at Electronic Data Systems in Plano, Tex.
Mr. Walker is expecting a lot of calls in the next weeks and months as mortgage lenders start to press the panic button. Most servicing systems will meet year-2000 requirements, but trouble for mortgage lenders centers on the interfaces - how lenders connect to organizations outside of their control, Mr. Walker said.
The risk mortgage lenders face is a total shutdown. If technology doesn't function, "things are going to grind to a halt," said Mr. Walker. The secondary market also stands to be hit hard if it is not ready because it relies on technology for trading, Mr. Walker added.
Mortgage lenders need to be able to service and originate loans with their system while repairs occur, said Stanley A. Mattos, senior vice president and director of Alltel Corp.'s year-2000 program. Mortgage lenders have to "manage not only how you repair but how you re-implement the repaired software and hardware back into your production environment so that it does not impact the pieces that you haven't repaired yet," said Mr. Mattos,
"It's got to work for the year-2000 but its got to work in 1998 and 1999 as well," he added.
Freddie Mac is requiring lenders to be compliant by December 31, 1998 to give its customers all of 1999 to test systems and to monitor and evaluate performance of systems. Fannie Mae has asked lenders to be compliant by the end of March 1999.
Mortgage lenders have taken different approaches to the problem. HomeBanc Mortgage Corp., Atlanta, sells loans to both Fannie and Freddie and has hired Coopers & Lybrand and a full-time internal manager to have the company compliant by Jan. 1, 1999, a spokeswoman said.
Waterfield Mortgage Co., Fort Wayne, Ind., has its own technology staff working on planning, execution, and testing. The company has purchased a number of software packages and heavily modified them, making Waterfield less vendor-dependent, said Len Tichy, senior vice president for business development.
"The dependencies on other systems are where our biggest concerns are," said Mr. Tichy. The problems tend to be with connections to other systems or with data transfer, he said. Almost all of Waterfield's year-2000 issues are on the servicing side because of older code, he added.
But companies that do year-2000 consulting say that most mortgage lenders are behind the eight ball.
"I think what they're doing is procrastinating," said Mr. Walker of EDS. "I would say that there are an awful lot that are not going to be ready."
