HUD lenders use Pay.gov

Pay.gov

Officials at the Department of Housing and Urban Development have implemented their first Pay.gov application requiring banks and other mortgage lenders to pay recertification fees online at anytime, while reducing time and errors.

Since May 1, lenders have been able to securely log on to HUD's portal, download and sign prefilled recertification forms and make payments immediately, said Rosalind Hager, project manager at Advanced Technology Systems (ATS) Inc., which won a contract last summer to develop the application.

She said the service automatically calculates how much lenders owe so there is no underpayment or overpayment. If a bank disagrees with the payment, which is based on the number of active branches, it can change that there, and the bill is recomputed on the fly, she said. Payment is automatically taken from their checking accounts.

Sudhir Randraj, a task leader at the company, said account information is transferred in real time via Extensible Markup Language to the Federal Reserve Bank, which then sends a confirmation number to the user. The next day, HUD gets a report on the previous day's transactions.

Pay.gov is a governmentwide transaction portal that offers several electronic financial services, such as online collections, forms and billing, authentication and authorization, and reporting. The service is managed by the Treasury Department's Financial Management Service and was designed as a way for agencies to meet requirements under the Government Paperwork Elimination Act.

HUD's new application is a far cry from what lenders had to do in the past to get recertified each year by the department's Office of Lender Approval and Recertification. Previously, they had to send their fees to an Atlanta lockbox operated by Bank of America Corp., which processed the fees and transmitted data to the agency every night. Boxes of photocopies of cancelled checks were also sent to agency staff, which had to manually reconcile each collection against their records. Sometimes lenders did not pay the entire fee so a notice would have to be sent out again, Hager said.

Randraj said HUD paid 85 cents for each paper transaction processed through that lockbox. There are about 20,000 active HUD-approved lenders, and the department does about $8 million in recertifications annually. Not only does it save postage and time and reduce errors but also the department can reassign staff for other tasks.

ATS officials, who have other contracts with HUD, began working on the application July 2003, meeting with HUD and Treasury officials and users. Testing began in January followed by a pilot project in late March before the application was fully operational May 1.

Hager and Randraj said the application is replicable and is working with the U.S. Export-Import Bank for a similar service using credit card payments. They said HUD is also considering developing an application for collecting fees when a new branch is approved.

Besides XML, the company also used Macromedia Inc.'s ColdFusion, Java, mainframe Common Business Oriented Language, Sun Microsystems Inc.'s iPlanet, and Sybase Inc.'s Enterprise Connect.