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Mortgage Company Cashes in on Web Services: Page 7 of 16

The efforts paid off. The early proponents that favored big iron saw that the security concerns could be managed over IP networks. And as more case studies came in showing what other industries were doing with IP technologies, such as manufacturing and technology vendors, confidence in putting together an Internet solution grew within the company. "We saw that we weren't quite bleeding edge," Potosky says. "There was viability there." Up until three years ago, more than 85 percent of its IP traffic went over that private network, but now the majority of traffic is routed over the public Internet. As you might imagine, given the volume and nature of its transactions, Freddie Mac takes security and redundancy seriously (more on this later).

Along with deploying a private IP network, Freddie Mac also was creating the application architecture. Initially it opted for Java-based applications and avoided Microsoft servers because of security concerns. Now that it has built a solid infrastructure for these applications and it understands the issues in hardening Windows servers, the company is looking at the .Net environment and IIS. This is typical of the arc many companies that have opted into Web services have taken.

Standard Operating Procedures

Freddie Mac also recognized that Internet standards would go a long way to helping it integrate with the innumerable entities that took part in processing loans. To that end the company took an early and leading role toward adopting standards and proselytizing these standards across the mortgage industry, including the WS-* Web service standards.

Dozens of Freddie Mac's staffers are involved in various capacities with the Mortgage Bankers Association's group called the Mortgage Industry Standards Maintenance Organization (MISMO). The group began in 2000 with plenty of support from Freddie Mac and Fannie Mae, and the idea was simple yet powerful: Set data interoperability standards to enable more efficient loan processing and closing, and facilitate transactions between lenders and the secondary loan markets where these loans are resold. At the heart of MISMO's standards efforts are XML documents and schemas that enable paperless transactions as loans are moved from the originating bank to Freddie Mac and then into a collection of securities. "Our goal was to create a legally binding document that we can use everywhere, and create a paperless transaction from end to end," Barkley says. Although there's still a lot of paper involved in the transaction, MISMO has laid a solid foundation with these XML standards.