HUD on-line service smooths loan processing

Banks and other lending institutions this month began tapping into a new Department of Housing and Urban Development on-line service that streamlines loan processing by giving the lending community real-time access to loan processing information for mortgage insurance.

Each year the Federal Housing Administration insures millions of dollars in loans made institutions to low- and middle-income home buyers by banks and other financial. But collecting and disseminating the information needed to process the insurance on those loans can be an intensive task sometimes requiring HUD workers to respond to paper requests sent in by lenders.

Most lenders though are sending and receiving information for processing the loans via dial-in electronic commerce/electronic data interchange programs said Jim Beall division director for housing systems in HUD's Office of Information Technology. But even those programs do not allow the real-time information access and convenience that the new service called FHA Connection will allow Beall said.

"This is an important step in the direction we want to go in [for] a variety of HUD programs " said Steve Yohai HUD's chief information officer. "We don't want to post information on the Web. We want to do real business over the Net."

A Phased Approach

FHA Connection will be rolled out between now and October in three phases. The first phase of FHA Connection will allow lenders to perform such on-line tasks as accessing loan data registering underwriters querying the status of cases and reassigning appraisers. The FHA Connection project also lets lenders access an automated voice-response system for verifying a borrower's credit.

The second phase going on-line in late July will allow lenders to request case-number assignments inspector assignments case cancellations and refinance authorizations. The final phase expected by Oct. 20 will allow lenders to access FHA approval lists for appraisers inspectors and mortgage limits. Beall said information sent over the Internet will be encrypted and protected by user IDs and passwords.

It is costing HUD almost $600 000 in terms of software and staffing hours to get FHA Connection running according to Beall. He was unable to quantify the savings FHA Connection will bring but he said HUD and lenders will be saving time by using FHA Connection.

Automation of the loan process and other investments in IT will help HUD meet its goal of trimming the agency's staff from 10 500 to 7 500 by fiscal 2000 said HUD spokesman Victor Lambert.

Mark J. Riedy a professor of real estate finance at the University of San Diego School of Business Administration and a former president of the Federal National Mortgage Association said he believes HUD should be applauded for tapping the Internet as a forum for business.

The service should free-up people and shorten the time it takes HUD to process loans and "time is money " Riedy said. He also predicted that lending organizations would see some efficiencies with information being garnered more quickly. "The only disadvantage is if [HUD] doesn't move fast enough " he said.

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