As the Federal National Mortgage Association explores new technologies, lenders have been wondering how they will be affected. James Johnson, Fannie Mae's chairman, laid out the agency's technology agenda while speaking at a conference of the California League of Savings Institutions. An excerpt follows.
Our technology agenda is substantial. We're working with our customers on reducing the costs of origination. We are supporting the development of electronic data interchange standards that improve the sharing of origination, credit, mortgage insurance, title, underwriting, and delivery information among industry participants.
We're working with the [Mortgage Bankers Association of America] to create a book-entry registry for mortgages like those that exist for the stock and bond markets. We are developing an automated underwriting system that 'will reduce the time spent on routine applications so that more time is available for processing more complicated files.
We're developing an counseling system to enable housing counselors to better prepare low- and moderate-income applicants, match them with affordable mortgage products, and create financial plans that put them on the path to home ownership.
Slashing Origination Costs
We believe these efforts by Fannie Mae and our customers can cut in half the average cost of originating mortgages and improve the industry's responsiveness to low- and moderate-income buyers.
We've shared these ideas with our Technology Advisory Council have heard from them what a significant effect these initiatives could have on the industry. We've told them that we recognize that our size and central position in the industry thrusts upon us a leadership role in this area as well.
We share the desire of many in the industry to avoid a technology competition that could result in higher costs rather than reduced costs. We also agree that any industry technology must be open, adaptable to existing systems, and available to all participants at reasonable costs.
Technology will change the way we all do our business and will reinforce the strong, competitive nature of our industry.
Nevertheless, our continuing partnership with Fannie Mae seller-servicers will be the centerpiece of our business relationships. I can assure you they will be vital to the success of these technology initiatives.
We will keep our focus squarely on the seller-servicers who originate and service mortgages, interact with borrowers, and have the financial strength to stand behind their origination decisions.
Technology will, not by itself, determine who will be the most successful competitors. Rather technology will provide a more efficient business environment where lenders will compete to provide the best service to homebuyers of every economic status.