have traditionally paid most of their attention to building volume. But the mortgage business, which has been for years among the most labor intensive and paper-oriented of financial industries, now finds itself in the throes of sweeping technological change. Highly complex and noted for its myriad of distinct business lines, the mortgage industry must step up its efforts to integrate a range of technologies that originate, close, and ultimately sell loans to the secondary market. Its hope is to free itself from the paper deluge and excess product and back-office costs. Or at least that's the message many mortgage bankers took home from last month's Mortgage Banking Association of America conference held in San Diego. Few doubt that technology will reshape the way their business is conducted. They agreed that fundamental change was necessary to remain competitive. "Mortgage companies are 15 years behind" other financial markets, such as the commercial banking and securities industries, claimed Barbara Smiley, an analyst at the Tower Group, a Wellesley, Mass.-based bank technology consulting firm. Technology historically has taken longer to take root in the industry because "it's difficult to do something systemic when you have so many people with different interests and different priorities," said Ms. Smiley, herself a former mortgage banker with Prudential Home Mortgage in Frederick, Md.

*** But an example of how the industry can come together for mutual benefit is the MBA-led initiative called the Mortgage Electronic Registration System, or Mers. The system will be an electronic registry whose data base will track mortgages for the life of the loans. Inter-company communications will occur via electronic data interchange - the electronic transfer of business data in standard formats. Officials said Mers will eliminate the vast volumes of paper every time servicing rights are transferred. The system will be owned by a consortium of industry groups and mortgage companies, including the Federal National Mortgage Association, the Federal Home Loan Mortgage Corp., the Federal Housing Administration, and Government National Mortgage Association, among others. Officials say the industrywide utility will be up and running in little more than a year. Several mortgage bankers have become involved, and Mers has secured over $3 million of funding for its development.

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