Many people think technology for mortgage servicers can be summed up in one word: Alltel.

Most mortgage companies use Alltel's servicing system to manage portfolios. The company's servicing system handles 16 million loans amounting to more than $1 trillion of the nation's mortgages.

But there are other systems.

Fiserv's Data Link and Excelis MLS, a servicing system designed by the defunct Lomas Financial Corp., are two of Alltel's major competitors. Excelis was a highly regarded system before Lomas' financial problems led to bankruptcy. It was sold to Prudential's Residential Services Corporation of America in 1994 and was bought last year by First American Real Estate Information Services.

A key issue for most servicers that purchase systems off the shelf is determining how to integrate information from the mainframe that houses the servicing data base with the client/server personal computers that most employees use.

Jimmy Gaines, vice president of Excelis Inc., said that for cross- selling purposes, servicers would like to access more information from personal computers about customers in the servicing portfolio.

"Data mining is something that a lot of people are looking at as a classic desktop function," Mr. Gaines said.

To that end, many lenders at the Mortgage Bankers Association's servicing conference held in Dallas last month spoke about using more advanced forms of technology for loss mitigation.

Robert Caruso, senior vice president for Norwest Mortgage, said programs like the joint venture between the Federal Home Loan Mortgage Corp. and MGIC Investment Corp. to produce a default-prediction model can be used both on a mainframe and on a personal computer.

The program, Early Indicator, is a PC-based model, but Mr. Caruso said data generated from the program can be run through Norwest's mainframe servicing system. Norwest uses Alltel's servicing system.

In general, the servicing technology providers that will prosper will be those that also offer other mortgage-related products, Mr. Gaines said.

"One of the trends we've seen is a growing desire for a lot of service from few vendors, as opposed to a little service from a lot of vendors. One-stop shopping is appealing," he said.

He added that as servicers continue to look for ways to cut costs, servicing technology providers can benefit from outsourcing.

"A lot of service providers are taking over escrow functions and a lot of default functions," Mr. Gaines said.

But some servicers think it is better to invest in developing in- house servicing technology as opposed to relying on off-the-shelf items.

Robert Densmore, senior vice president of Source One Mortgage Services, said its servicing technology is designed at its headquarters in Farmington Hills, Mich.

The main reason that Source One prefers to use its own technology, Mr. Densmore said, is because it allows for more flexibility. This is especially important because Source One services loans for other customers.

"We could make changes when we deem it important," he said, adding it's often difficult to modify a third-party vendor's system.

Richard De Leo, managing director of Countrywide Home Loans, said that when new system features are needed, Countrywide can add them without waiting for a vendor to get customer consensus on the proposed changes.

Countrywide, the second-largest servicer in the country, also has developed its own servicing technology. Its programmers, who report to Mr. De Leo, are assigned to modify the servicing platform when necessary.

"The speed at which we could implement changes is faster," he said.

Mr. De Leo said that by designing its own system, Countrywide has integrated the mortgage lending process, from origination to default management.

'We very rarely have to take data off a piece of paper and key it into the system," he said.

But designing your own system is neither easy nor cheap. Mr. De Leo concedes that start-up costs are "very expensive."

Smaller servicers likely will continue to rely on technology vendors for servicing needs, but Mr. De Leo thinks more of the larger servicers will follow Countrywide's example.

"Eventually most of the major servicers, if they're not satisfied with the service providers, will build their own systems," he said.

But whether a servicer is using its own technology or purchasing a vendor's system, one of the biggest issues facing servicers looms less than three years away.

Many computers were not designed with the new millennium in mind. So when 2000 rolls around, dates in many computer systems will read 00 and not 2000. This could wreak havoc on all types of businesses, because events occurring in 2000 would appear to have taken place before 1999.

For servicers, this is especially worrisome because dates are vital when calculating payment schedules for adjustable-rate mortgages, Mr. Gaines said.

In order to combat this dilemma, Mr. Gaines said servicers either must wait for their vendors to modify code or write their own programs. Either way, the solution will be costly.

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