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InfoBytes

SPECIAL ALERT

CONSUMER FINANCE HEADLINES & DEADLINES FOR OUR CLIENTS AND FRIENDS

April 28, 2006

Freddie Mac Issues eMortgage Timeline.

Freddie Mac has played a significant role in developing and validating uniform and accessible industry eMortgage standards. These efforts include membership in the MERS eRegistry and leadership roles in the Mortgage Bankers Association's MISMO standards group, the Electronic Financial Services Council (EFSC) and the SPeRS initiative. Drawing upon these established standards, in December of 2005, Freddie Mac published an eMortgage Handbook to help mortgage industry participants understand Freddie Mac's requirements for originating, delivering and servicing eMortgages that Freddie Mac will purchase. See InfoBytes February 3, 2006. In addition to providing guidance to originators, the eMortgage Handbook also outlines requirements for eCustodians and eMortgage vault system providers.

Following on the publication of the eMortgage Handbook, on March 29, 2006, Freddie Mac published the Single Family eMortgage Timeline - The Benefits of eMortgages and Next Steps for Adoption (eMortgage Timeline). The eMortgage Timeline outlines the issues that Freddie Mac believes are relevant to continued growth of the eMortgage marketplace, including understanding the benefits of eMortgage adoption, and sets forth certain timelines for adoption and next steps.

According to the eMortgage Timeline, the benefits of eMortgage adoption include:

Eliminating costs and errors associated with paper processes;

Increased data integrity;

Reduction in the number of post-funding data corrections;

Automated compliance audits;

Improved delivery processes; and

Increased efficiency in quality control audits.

It is Freddie Mac's view that in order to realize these benefits and reach the "next level," industry must continue to attend to address certain structural changes, including:

Building out the mortgage industry's electronic document infrastructure;

Addressing the special legal, business and technical requirements that apply to electronic notes; and

Resolving issues associated with creating and recording electronic security instruments, such as adopting and implementing Property Records Industry Association standards for recording electronic documents.

The eMortgage Timeline also provides Freddie Mac's projected schedules for achieving the next steps for eMortgage adoption. One timeline sets forth Freddie Mac's projected efforts on behalf on eMortgages, which include:

Publishing and updating eMortgage guidance and specifications;

Establishing connectivity to the MERS eRegistry;

Integrating with lenders and custodians;

Introducing new delivery, quality control and default processes; and

Continuing industry standards efforts.

In addition, Freddie Mac suggests the industry can assist in driving eMortgage adoption by:

Familiarizing itself with eMortgage technical, legal and business requirements;

Defining an eMortgage strategy, selecting and implementing eClosing and eVault solutions;

Establishing MERS connectivity;

Working with other business partners on eMortgage implementations;

Modifying data handling processes;

Integrating with Freddie Mac; and

Continuing to participate in industry forums to drive eMortgage technology solutions.

All resources listed in this InfoBytes Special Alert can be accessed via the appropriate hyperlink. If you cannot access them, please let us know. If you have any other questions, please contact:

Margo H.K. Tank (202) 349-8050

Jeremiah S. Buckley (202) 349-8010

Frank J. Supik (202) 349-8039

© Buckley Kolar, LLP 2006. INFOBYTES is not intended as legal advice to any person or firm. It is provided as a client service and information contained herein is drawn from various public sources, including other publications.

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