Fannie Mae, moving swiftly to roll out its new electronic network, has sent out letters inviting vendors of mortgage services to participate. The letter says the first applications on the network will be available July 15.
Fannie is calling the network Mornet-EDI. The letter describes it as "a value-added network for the exchange of information utilizing electronic data interchange [EDI] standards to connect lenders to credit bureaus, mortgage insurers, title insurers, hazard insurers, and many others."
The letter, signed by Scan Smith, project manager, says Fannie, formally the Federal National Mortgage Association, is developing interfaces for credit reporting and mortgage insurance transactions.
"We will also be developing application interfaces and translation maps for title and hazard insurers," Mr. Smith writes.
And finally, Fannie will be including appraisals and other services.
Mr. Smith encourages vendors to "offer an aggressive price to lenders" in exchange for participation in the system, which he says will provide them with access to some 4,200 lenders.
Many smaller vendors, however, fear that the system will have the effect of shutting them out of the marketplace and fostering monopolies in mortgage services.
Another of the controversial aspects of Mornet-EDI is its automated underwriting capability.
This would enable lenders to get preapprovals of loans from Fannie, insulating them from having to take back loans that go sour.
But companies that have made big investments in their own underwriting technology complain that Fannie's system would eliminate any competitive edge by giving all lenders the same capability.
Lenders Can Pick Their Price Level
Possibly in an effort to defuse this controversy, the Fannie letter points out that lenders will be able to participate "at the price point of their choice."
It continues: "For those who have already made significant investments in technology and only wish to integrate their inhouse systems into a standards-based network, Mornet-EDI can serve as their integrated communications backbone."
But those who want to replace their in-house systems, Mr. Smith writes, Mornet-EDI will "operate as a set of integrated desktop tools supporting the origination, underwriting, and secondary-marketing functions."