The MISMO standards efforts were helped by a general standards climate in the mortgage industry that dates back to X.25 EDI networks and X.12 standards bodies. The idea was to bring them into the 21st century with Web transactions, using the structured "smart documents" that XML could describe and that could be used by just about any part of the Freddie Mac mortgage ecosystem.
But the more the company relied on XML and Web standards, the clearer the need became for a wholesale upgrade of its legacy systems. This fed into its next step, the actual conversion effort. Freddie Mac had hundreds of different mainframe applications covering numerous business processes, some with code that dated back to 1986. Most companies would have started a small pilot program and dipped a hesitant toe in the Web waters. Not Freddie Mac. It tackled its biggest customer-facing apps--the ones involving loan approvals for their member banks for single-family residences--first. Why? "The single-family side was the most antiquated side of all our applications, and it was the side that was the furthest behind the financial services industry in adopting new business techniques and methods," Albrigo says.
This conversion went along two different tracks-- developing Web apps that any size bank could use with minimal computing requirements, such as an Internet connection and a browser, and larger-scale systems designed to interact with its biggest customers. The key was that both tracks used the same Internet standards, protocols and methods. "These are the business-to-business standards that guide how we interact with each other and how we use Internet protocols and standards to specify the information that moves across applications," Albrigo says.
Freddie Mac used various bootstrap methods to evangelize the mortgage industry and get the word out about the new applications, and developed various training materials to quickly deploy the new applications. In a year, according to Albrigo, more than 1,200 customers were brought onto the new system; and the majority of them came on board in the last few months of 2005.
Having the browser-based infrastructure helped the lenders quickly learn how to use the system. Freddie Mac's move to Web services was also well-timed because it coincided with Web initiatives at its major banking customers. And these customers all wanted to migrate to more flexible systems that could give them faster turnarounds on their mortgage investments.