To extend the communications capability of its core mortgage processing product, Fitech Systems Inc. has developed software that allows banks and mortgage companies to electronically exchange information with third-party servicers.

Called the EDI Tool Kit, the software enables financial institutions to create electronic data interchange links with such entities as credit and title companies.

The program uses a standard communications protocol known as X.12, which establishes a common way to exchange information among those using the standard.

The tool kit is designed to be used with Fitech's flagship Mortgage Lending System, a PC/DOS-based system installed in over 150 financial institutions.

According to Charles Welsh, vice president of the Greensboro, N.C.-based lending software division, the company's goal is to facilitate electronic links between mortgage industry players, thereby streamlining the lending process.

"The (Mortgage Bankers Association) is trying to press the issue of cutting down the turnaround time to get a loan to consumers," said Mr. Welsh. "EDI is one of the keys."

So far, the tool kit has been purchased by Eastern Mortgage Services Inc., Home Savings Bank, CoreStates Financial Corp., and Citfed Bancorp and its subsidiary, Citfed Mortgage Corporation of America.

The tool kit extends the communications capability of Fitech's mortgage processing system, which already enables financial institutions to communicate electronically through proprietary links.

But these custom interfaces are expensive to build, said Mr. Welsh. A bank, for example, that wants to link with a number of third parties, has to write a special link to each company, he explained.

To forge these special links, some financial institutions rely on so- called "value added network" providers, such as General Electric Information Services, and Sterling Software Inc.

Since the EDI tool kit works with a standard protocol, companies are not limited to the services provided by value added networks, said Mr. Welsh.

"This puts control in the hands of users," he said.

The software also allows more cost-effective interfaces with whoever else uses the standard, he added.

Priced at under $10,000, the EDI Took Kit can be used to make an unlimited number of EDI interfaces at no additional cost, under the terms of a licensing agreement with Fitech.

By contrast, a mortgage operation requiring custom programming could expect to pay this much for two interfaces, Mr. Welsh said.

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