Since Federal Housing Administration mortgages now account for more than 30% of any given home lender's originations, technology vendors are working hard to automate these loans to help their customers build volume.
For example, MortgageFlex Systems Inc. in Jacksonville, Fla., has completed the first of three planned phases of a project linking LoanQuest, its loan origination system, to the FHA Connection Web site.
FHA Connection, introduced in 1997, provides an accelerated means of obtaining case numbers, remitting mortgage insurance, obtaining borrower authorization codes, logging appraisals and various other functions. The Department of Housing and Urban Development requires lenders to use the site for any interactions that can be accomplished via the Internet. Even so, the connection is seldom embedded in an origination system.
The link to LoanQuest is intended to give MortgageFlex customers that are FHA-approved lenders real-time access for originating and servicing government-insured loans. The project's first phase automates lenders' initial contacts with the agency.
"LoanQuest fully supports all FHA functions," said Craig Bechtle, the chief operating officer at MortgageFlex, "so when that became the 'product du jour,' it wasn't a stretch for us.
"The biggest hurdle," Bechtle said, "is getting customers fully and properly trained" to work with the agency. MortgageFlex has addressed this issue by offering customers free courses on how to use LoanQuest for FHA lending.
Similarly, Mortgage Builder Software Inc. has gone live with its interface to FHA Connection. The link lets Mortgage Builder users gain access to the HUD system's functions without leaving the vendor's platform.
Lenders say they are seeing the benefits. "It really speeds things up for us," said Allison Renaud, the chief underwriter and mortgage operations manager at Peoples State Bank in Madison Heights, Mich., an early tester of the FHA Connection-Mortgage Builder link that has been using it successfully for several months.
Peoples State uses FHA Connection to order case numbers and assign and log appraisals, among other things. Instead of switching between Mortgage Builder and the FHA site, Renaud said, "we can do the insurance application in just a few minutes with virtually no data reentry. Before, … we could spend 15 to 20 minutes just on that one task."
VirPack in Vienna, Va., has completed a test of end-to-end electronic case binder delivery with FHA and is now supplying such delivery to Wintrust Mortgage Corp. in Oakbrook Terrace, Ill.
With one click of the mouse, the case binder is created, indexed, stacked and delivered to the appropriate FHA regional office.
"We had been keeping an eye on HUD's specs for a while," said VirPack's president, Michael Coar. "We talked to our customers a while back when FHA was in the single digits, in terms of their volume, but now it could be as much as 80% or more. So, we looked at" electronic case binders "and built the spec. Our phone started ringing about this, given that FHA volume is huge now."
Xerox Mortgage Services of Alpharetta, Ga., also has a connector to FHA that allows for one-click submission of loans to the agency. In discussing the overall industry significance of FHA's path to accepting electronic delivery, Greg Smith, a vice president at Xerox Mortgage Services, said, "This means the path to the eventual full electronic mortgage is being paved in sequential steps at FHA. It's progress that FHA has delivered their imaged specification and we vendors are stepping up and delivering it to our lender clients."