Fannie Mae Releases New Electronic Mortgage Guidelines
Company Prepares to Purchase Electronic Mortgages in the Future
October 26, 2000
WASHINGTON, DC ? Fannie Mae (FNM/NYSE) released its initial guidance and data specifications for the delivery of single-family electronic mortgages. Today?s announcement, the first guidance of its kind in the industry, will assist lenders in preparing their business processes and information systems for originating and servicing electronic mortgages that can be delivered to Fannie Mae.
"Electronic mortgages have the potential to transform the mortgage origination process," said Michael J. Williams, president of Fannie Mae e-business. "Fannie Mae is committed to leading the way to broader acceptance of e-mortgages and this initial guidance is a landmark first step in that direction. E-mortgages will eliminate significant amounts of paper, reduce time, and ultimately, lower costs for lenders and consumers alike."
Although the company is not yet accepting electronic mortgages on a broad-scale basis, in July 2000, Fannie Mae purchased the very first electronic mortgage delivered into the secondary market. Now, with the recent enactment of the federal E-SIGN law, Fannie Mae will continue to lead the industry toward fully electronic mortgages by providing relevant guidelines for its lender partners.
At the heart of these guidelines is Fannie Mae?s recognition that "smart" documents are the key to unlocking the potential that electronic mortgages hold for the industry. A smart document locks the data and the document presentation in a single file. This unique property can ensure legal enforceability and data integrity throughout the mortgage lending process. After an extensive technology evaluation, Fannie Mae has selected XHTML 1.0 as the first data format to meet its new requirements. XHTML combines Extensible Markup Language (XML) and Hypertext Markup Language (HTML), both widely used languages in e-commerce. Going forward, additional formats will be reviewed and adopted to the extent they are acceptable to Fannie Mae.
The e-mortgage guidelines include general legal and technology requirements that lenders will need to follow to deliver electronic mortgages to Fannie Mae. Among the critical requirements and guidelines are:
- Using the XHTML language ? an open, non-proprietary data format ? for selected documents to be delivered to Fannie Mae;
- Including specific language within the e-mortgage note that the borrower has agreed to the electronic transaction; and
- Meeting the requirements of E-SIGN to create a legally valid, enforceable mortgage note, including the use of electronic signatures.
Fannie Mae?s guidance incorporates many of the e-commerce standards and definitions that it has helped to shape within the industry. The company plays an active role in the Mortgage Bankers Association?s Mortgage Industry Standards Maintenance Organization (MISMO) and other working groups on developing standards for data definitions and for secure transmissions within the mortgage industry.
"We are pleased that Fannie Mae has taken these steps to lead the lending community in its move toward electronic mortgages," said Mark Braden, chief information officer of the Irwin Mortgage Corporation. "We expect these guidelines to help streamline the origination and delivery process for us, our customers, and our business partners in the industry."
"Fannie Mae?s issuance of their new electronic mortgage guidelines reflects their continued dedication to providing innovative mortgage solutions to their customers," said David Espenschied, chief executive officer of the eBusiness Division for Countrywide Credit Industries. "The mortgage industry needs to establish standards to achieve the economies inherent in the broad acceptance of electronic documents. We applaud Fannie Mae?s efforts in this important endeavor."
Source: Fannie Mae