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IN THE SEPTEMBER 1999 MORTGAGE Banking, Bob Dart of CBF Systems wrote an essay advocating the adoption of XML in the mortgage industry. XML is extended mark-up language, an evolution from the HTML (hypertext mark-up language) that has been the widespread choice for turning text into Web pages. Dart is a member of what is called the "XML-MP," an initial group of eight vendors and lenders seeking to develop an XML standard for the industry. This group's efforts were viewed by some as a challenge to the Mortgage Bankers Association of America's (MBA's) own XML Work Group, and a controversy has arisen regarding ownership, process and authority. Many industry players, including many lenders, feel they must choose sides. Many also feel that adopting XML means repudiating the industry's long-standing effort to implement ANSI X12 EDI standards.

This is unfortunate, since XML represents a true breakthrough technology that may solve problems that have plagued us all for years. In this column I will explain the technology and identify the pros and cons of XML use. In next month's column, I will discuss the issues related to standards development and make recommendations on how the mortgage industry might best proceed.


The widespread adoption of the Internet as a vehicle for commerce has focused a spotlight on a core problem in information technology: how to get information that is originally created in one format or on one platform to be accessible in another format and another platform. On the Web, the challenge was initially to make text (marketing brochures, order forms, product descriptions, etc.) accessible to browser software such as Netscape Navigator or Microsoft(r) Explorer.

The solution was HTML, a specialized language that programmers use to apply "tags" (header, table, background color, bold, italic, etc.). Up until now, programmers have had fairly free rein in how they used HTML and how they formatted their pages. This freedom, however, means that each organization has essentially built a proprietary standard that may be used throughout the company but does not necessarily conform to any other firm's own HTML. One observer has stated that today's Internet is "a vast, unruly collection of HTML, JavaScript and Java on the client side, and a grab-bag of scripted and compiled languages on the server side." This makes it difficult to exchange data, the key requirement for true business-to-business transactions.

XML, introduced in 1996, also uses tags, but in a more rigorous manner that enforces a discipline and structure. It also allows elements of text to be designated as data elements, not just words. The tags define what the data is and does, not just what it looks like. Thus, the XML substructure provides a framework for defining extensions that will be understood by other XML tools, applications and projects.

Indeed, in XML, the document becomes a database, with fields that can be queried just like other databases. This significantly speeds up the search, since an application no longer needs to read everything in a file but rather just the tags it's looking for.

Each industry defines its standards, most commonly via DTDs (document type definitions). These establish the schema, the logical structure of the document. Schemas contain data element types, naming conventions, where the elements may occur in a document and the relationships among the elements.

As an example, a lender has an HTML page on its Web site that contains pre-qualification survey questions. By defining an XML extension, the items "borrower name," "address," "property type," etc., can be identified as data fields, not just text. They can be read by the loan origination system (LOS) database, by an application that pulls credit, by an automated underwriting system, by a Microsoft Word(r) document that prints a form letter or any number of other applications without the programmers having to create unique interfaces to each application. This is an enormous time-saver, especially if the interface involves effort across more than one organization (e.g., a lender and a credit bureau).


Thus, where HTML made the Web accessible to people, XML makes it accessible to machines. It helps turn the Web from an information/communication vehicle to a commercial medium. And, just as communication on the Web is open to virtually everyone, and no one knows in advance who all the players will be, so too does XML provide an open standard that could allow any number of firms to participate in a transaction. The barriers to entry for new players are virtually nil, keeping commerce truly competitive.

Another advantage to XML is that it leverages the existing investment in HTML. It is also possible to leverage the huge investment in existing legacy databases, such as a bank's checking account file or an insurer's policy database. Indeed, some large companies see XML as finally providing the opportunity to knit together all its disparate systems on local area networks (LANs) as well as the Internet. This would bring about a true "seamless" integration--long the Holy Grail of information technology (IT).

Major database vendors such as Oracle, Sybase, IBM and Informix have announced plans to build XML into their products next year. The next versions of the browsers will as well. Sun Microsystems has announced XML extensions to Java, the popular Web development language. There are also already some primitive XML editing tools available for less than $500. A recent Cap Ventures study of 250 IT and business managers found that more than two-thirds were implementing XML in 1999 and 65 percent plan to increase spending in 2000.

XML is an emerging technology, and there are still open issues--including whether format definitions are best handled by DTDs or schema languages such as XML-Data/DCD. Also still under debate is whether documents will be viewed using extensible style language (XSL) or cascading style sheets (GSS). Also, although XML is flexible enough to translate data from EDI messages, it is not particularly efficient at this task. If large amounts of data are routinely transferred from machine to machine over wide area networks (WANs), or if it is unlikely to ever appear on a Web page, EDI is still the way to go. In the financial world, this includes such applications as credit card interchange or funds transfer; in mortgages it includes title policy and appraisal data, for example.

Nevertheless, XML represents a critical new technology for all those interested in e-commerce, and it could be a real boon to an industry such as ours that involves so many different enterprises in the mortgage loan transaction. It is important to remember that the key advantage of XML is that it provides a standard. How the standards are developed is a critical issue to the mortgage industry. That is the subject of next month's column.

Leilani Allen, Ph.D., is a partner with Summer Point Consulting in Mundelein, Illinois, Summer Point provides strategic planning, process improvement and technology assessment services and has offices in the Chicago and Dallas metropolitan areas. Allen may be reached at
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Title Annotation:extensible markup language and its applications to the mortgage industry
Author:Allen, Leilani
Publication:Mortgage Banking
Geographic Code:1USA
Date:Jan 1, 2000
Previous Article:Letter.
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