Customer and vendor testing and software upgrades are moving forward as the mortgage industry seeks to solve the year-2000 problem.

Credit Network, a mortgage credit reporting company in Framingham, Mass., began its compliance efforts in the first quarter of 1997 and is one of the first such companies to be completely year-2000 compliant, according to Michael J. Wittman, executive vice president.

"Cost is a direct function of how close it is to year 2000," Mr. Wittman said. "The closer it gets, the more resources, programmers, and consultants will become scarce-because everyone else is needing them too."

Like other credit bureaus, Credit Network must interface with many customer systems in order to transmit credit reports electronically.

At LoanSoft Inc., John Caner, chief operating officer, said, "We're a Microsoft shop with about 90% of our clients using laptops." LoanSoft is a five-year-old business in Berkeley, Calif., that provides software to loan originators.

For Windows-based companies, the year-2000 problem may be more easily addressed because Windows 98 is compliant and updates may be patched into some versions of Windows 95, Mr. Caner said.

Alltel Residential Lending Services of Jacksonville, Fla., services about 45% of the nation's mortgages and is in the testing phase of compliance efforts that were initiated in 1994.

"People grossly underestimate the size of this project and if they wait, resources start to dry up," said Barbara Bull, Alltel's managing director of year-2000 compliance. "If you do it early, it gives you more time to go through processes to see if you've messed anything up."

The Federal Financial Institute Examinations Council represents five combined Federal agencies that govern many of Alltel's clients. If an audit results in an unsatisfactory score, the council may step in and limit a user's business.

"The FFIEC recommended that everyone be compliant by the end of '98 but have moved it back to June of '99," said Ms. Bull. "The financial industry is taking the Y2K issue very seriously and is probably far ahead of every other industry working on the problem."

Experian, an Orange, Calif., information management company dealing with consumer and business credit, estimates its compliance costs at about $40 to $50 billion since January 1996, when efforts began.

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