www.hudclips.org U. S. Department of Housing and Urban Development Washington, D.C. 20410-8000 October 17, 1994 OFFICE OF THE ASSISTANT SECRETARY FOR HOUSING-FEDERAL HOUSING COMMISSIONER MORTGAGEE LETTER 94-49 TO: ALL APPROVED MORTGAGEES ATTENTION: SINGLE FAMILY SERVICING MANAGERS SUBJECT: Electronic Commerce With FHA - A New Business Paradigm REFERENCE:Mortgagee Letter 93-10, Single Family Claims for Insurance Benefits: Electronic Data Interchange Pilot Implementation, dated April 5, 1993 Electronic Commerce with FHA has arrived. The Department of Housing and Urban Development (HUD) is pleased to announce the operational readiness of HUD's Electronic Data Interchange (EDI) program. With the dedicated participation of the BancPlus Mortgage Corporation and SourceOne Mortgage Services Corporation, who served as our pilot test partners, the EDI pilot program for electronic filing FHA mortgage insurance claims is a declared success. Both companies are now submitting their Single Family Claims for Insurance Benefits to HUD via EDI and receiving payment via Electronic Funds Transfer (EFT). Their success clearly supports our belief that EDI will revolutionize the way the mortgage industry conducts business. EDI will result in eliminating delivery delays, more efficient and timely processing, complete reconciliation of reporting and accounting data and, most of all, faster payment of claims. Electronic Data Interchange, we believe, will become a dominant means of conducting business in the future, and as such will eventually affect the entire mortgage banking industry. HUD is now prepared to schedule EDI-capable mortgage lenders/servicers for implementation into the EDI program, starting with the Single Family Claim for Insurance Benefits (Form HUD-27011). Other HUD FHA business transactions that will be added to the EDI program later this year are Mortgage Loan Default Status Reports (Form HUD-92068A), and Mortgage Record Changes/Terminations (Forms HUD-92080 & 27050A). Mortgage Insurance Premium Collections will become a part of the program early in 1995. We will initially add those mortgage lenders/servicers that have taken the preliminary steps to join the program through (1) attendance at a HUD EDI orientation seminar, and (2) submission of an EDI Mortgagee Profile Survey to HUD. If your company has completed these requirements, your next step is to provide HUD with a preferred date to begin the transition to becoming a HUD EDI trading partner. Page 2 Please contact Mr. John Buck, HUD's Trading Partner Coordinator at (800) HUD-4EDI (i.e.. 800-483-4334) to let us know your intentions to use one or more of the transaction types listed in the attached EDI Near-Term Program Schedule. Through our Trading Partner support program we will provide guidance during your preparations and schedule you to begin HUD testing and start-up procedures, as soon as you are ready to become a trading partner. "Ready" means that you are EDI-capable with a value-added network (VAN) and appropriate EDI software. If you use the facilities of a Service Bureau, becoming EDI-capable will probably be simplified as HUD has taken steps to encourage these companies to provide EDI-capable services to their clients. If your company has not yet taken the preliminary steps to join the program, we urge you to begin doing so at this time by: A.Completing and returning an EDI Profile Survey form to HUD. The survey form may be obtained by contacting the Office of Information Policies and Systems (attention Rex Gavin at (202) 708-0306). B.Planning to attend a HUD EDI Orientation Seminar. Please inform the Trading Partner Coordinator of your interest. In order to best serve those mortgagees who desire to participate in EDI, HUD needs to identify both the companies and which locations would best serve their needs before we schedule future EDI Orientation Seminars. The use of EDI as a strategic business advantage will revolutionize the way HUD and mortgage lenders/servicers conduct business. We look forward to having all FHA-approved mortgagees joining HUD in this exciting new endeavor. Attachment Sincerely Yours, Nicolas P. Retsinas Assistant Secretary for Housing- Federal Housing Commissioner EDI NEAR-TERM PROGRAM SCHEDULE =========================================================================== Transaction Transaction Estimated Type Set Number Title of Transaction Set Implementation Date =========================================================================== 260 Application for Mortgage Now available Insurance Benefits (replaces paper Form HUD-27011, Single Family Claims for Insurance Benefits) _____________________________________________________________ Claims 820 Payment Order/Remittance Advice Now available _____________________________________________________________ 824 Application Advice (for Single Now available Family Claims) =========================================================================== 264 Mortgage Loan Default Status October 1994 Default (replaces paper Form Reports HUD-92068A, Single Family Mortgage Defaults) _____________________________________________________________ 824 Application Advice (for Default October 1994 Status) =========================================================================== 266 Mortgage Record Change (MRC)/ January 1995 MRCs Terminations (replaces paper Form HUD-92080 and 27050) _____________________________________________________________ 824 Application Advice (for Mortgage January 1995 Record Changes) ===========================================================================