EDI Standard business documents, such as credit reports, loan applications, or investor reports, are referred to as transaction sets. These are composed of units of information called segments. Segments are composed of an identifier and one or more data elements, in which the actual value is expressed in compressed form separated by single-character delimiters. Data elements are the basic building blocks of an EDI document. A data element may be a name, code, date description, quantity or other information that has no need for further breakdown.

For those of you familiar with database concepts, segments are comparable to records and elements are comparable to fields described within those records. For each type of EDI document, there are standard definitions of the data segments that can be used to build the document along with a dictionary of data elements for each segment. As you can see, EDI transaction sets are quite structured. Transaction sets are defined in more detail in Section 4 - Mapping.

Similar to traditional postal-based mail, EDI uses envelopes to ensure that each document is correctly identified, and like documents are grouped together. Within the EDI standards there are three different types of envelopes, and the relationship between each type is illustrated in Figure 2-3.

Each envelope is defined as follows:

• Transaction Set - The transaction set envelope defines the beginning and end of a specific document, the type of document, and the number of segments included in that document.

• Functional Group - Transaction sets of the same type are sorted into functional groups.

• Interchange - The Interchange or transmission envelope includes transaction sets and functional groups. The interchange envelope contains the identity and electronic mailbox of the sender and the receiver, control information, and transaction set counts. Each envelope identified above begins, and ends, with special segments called control segments.

Adhering to the standards is essential to a successful EDI program. A successful EDI program will save both time and effort, and will minimize errors typically associated with traditional methods of information exchange.

As a Ginnie Mae trading partner you must establish a telecommunications link with Ginnie Mae. Ginnie Mae provides many options for this connection. Telecommunications options include ISDN, Web, VAN, and BBS. The most appropriate telecommunications connection depends upon the business needs of the individual trading partner. For example, an issuer with a small Ginnie Mae portfolio would probably not purchase and maintain an ISDN connection to transfer small amounts of loan data. Likewise, it may not be effective for a large service bureau to use a BBS connection. Each trading partner should evaluate which option is most cost effective for its business, based on the data size and frequency of its EDI transmissions. However, it is important to note that the Web is limited to 800 loans or fewer.

Another factor in your telecommunications decision is your organization's current telecommunications capabilities. For example, if your organization is already ISDN-capable, you would consider using ISDN to complete your connection.

The general guidelines for selecting from the telecommunications methods supported by Ginnie Mae are presented in Table 2-1. After determining the number of loans for which you have reporting responsibility, identify the appropriate telecommunications method to connect with Ginnie Mae. If you are unfamiliar with the method identified, refer to the sub-section that follows for more information or call the EDI Hotline at 1-888-GINNIE4.

Less than 10,000 Loans

Between 10,000 and 100,000 Loans

Over 100,000 Loans

Low Technical Ability

High Technical Ability

Low Technical Ability

High Technical Ability

Low Technical Ability

High Technical Ability

BBS

VAN

Web-Based

ISDN

The BBS option represents the lowest cost solution to Ginnie Mae's trading partners and is best suited for trading partners with a loan volume of up to 100,000 loans, as referenced in Table 2-1. Since this connection is established with an asynchronous modem, large transmissions may take a significant amount of time and are subject to transmission errors. Ginnie Mae will support the highest speed modems commercially available.

Note: Functional Acknowledgments will be generated, but will not be sent to each trading partner automatically when using the BBS connection method. Each trading partner will be responsible for dialing into the BBS to retrieve Functional Acknowledgments.

Additional information about the steps involved in establishing this connection can be found in Section 3 - Getting Started.

A VAN serves as a clearinghouse for electronic transactions, functioning as a private electronic mail service. Some of the services that a VAN provides include data archiving and storage, EDI-to-fax transfer, on-VAN translation, and consulting services. A VAN has the capability to support most commercially available options and is the most flexible of the Ginnie Mae options. The primary business purpose of a VAN is to provide a means of connectivity between trading partners. VANs also provide various contract services to the trading partners as requested.

The most basic data flow using a VAN would be from the trading partner to the VAN, then from the VAN to Ginnie Mae. The only variation to this scenario would occur if your VAN is different from Ginnie Mae's. In this case, your VAN would be required to establish an interconnection with Ginnie Mae's VAN. In both scenarios, you will be required to transmit your EDI data to your VAN mailbox to initiate the submission. Your Functional Acknowledgment will be transmitted from Ginnie Mae to your VAN mailbox. Data flow using a VAN is depicted in Figure 2-5.

The pricing structures of VANs vary and are based on individually negotiated contract terms; however, you can typically expect a per-character transmission charge in addition to monthly mailbox fees. Before choosing a VAN as your preferred method of transmission, it is very important to compute your expected transmission cost as determined by your VAN's per-character charge. Since VAN costs exceed the other communication options on a per-character basis you should consider VAN as an option only if you are trading less than 10,000 loans with Ginnie Mae, as referenced in Table 2-1. Exceptions can be made for trading partners who have pre-existing VAN relationships.

Ginnie Mae uses Inovis, Inc. for its VAN services. This does not mean that your organization must use Inovis, Inc. as its VAN. However, if a different VAN is used, an Interconnect Mailbag message must be sent between your VAN and Inovis, Inc. for transaction tracking purposes. The Interconnect Mailbag message is a standard EDI document that is supported by most VANs.

Additional information about the steps involved in establishing this connection can be found in Section 3 - Getting Started.

2.3.3 Ginnie Mae Web-Based

Ginnie Mae's Web-Based EDI program is a way to report loan level via the World Wide Web. The Web-Based EDI program is designed for issuers with smaller loan volumes (i.e., 800 or fewer loans). The Web-Based EDI application, developed by Ginnie Mae, is intended to simplify the reporting process by providing an on-line data entry screen for issuers to submit loan level data.

The primary benefits of the application are the ability to submit secure loan level data via the World Wide Web and the ability for issuers to submit EDI data without the additional cost of advanced telecommunications links to Ginnie Mae. In addition, the issuers receive an email back confirming a successful transmission.

ISDN facilitates high-speed business and personal communication needs that include voice, data, video, and graphics. Technically, ISDN is identical to a call initiated with a modem. Traditionally, these calls are established by dialing a telephone number that serves as the receiving party's address. The signal travels from the initiating party's phone to its local telephone company. At this point the call is either routed locally or patched through the caller's preferred long distance carrier (if the call being made is a long distance call). The call is then directed to the local telephone company of the receiver and terminates at the receiving party's phone. From the time the call is established until it is disconnected, communication is maintained using this path. ISDN calls are transmitted identically to normal phone calls, however, ISDN has the capability to transfer data significantly faster than the highest speed analog modems. Data flow using ISDN is depicted in Figure 2-6.

For trading partners who do not currently have an ISDN infrastructure in place, an ISDN connection will typically result in higher startup costs. However, once established, this connection offers a cost-effective solution for trading partners with large loan volumes. As referenced in Table 2-1, you should consider ISDN as an option if you are trading more than 100,000 loans with Ginnie Mae.

While there are many different ways to transmit data using ISDN, the basic considerations to keep in mind when procuring and installing your ISDN hardware and software are:

• Ginnie Mae uses a Cisco router to transmit and receive ISDN and requests that your transmission hardware and software be compatible with Cisco to ensure proper interaction.
• You may need to purchase a Network Termination Device (NT1 Device) and Channel Service Unit/Data Service Unit (CSU/DSU). A NT1 device provides an interface between the two-wire twisted pairs used by telephone companies in their ISDN network and an end-user's four-wire terminal equipment. The NT1 also provides power for the terminal equipment, if necessary. The CSU is a device that connects a terminal to a digital line. Typically, the two devices are packaged as a single unit. You can think of it as a very high-powered and expensive modem. The DSU is a device that performs protective and diagnostic functions for a telecommunications line.
• In order to transmit using ISDN, you will need to request an ISDN phone line from a telephone access provider. Ginnie Mae supports ISDN connectivity using TCP/IP (Transmission Control Protocol/Internet Protocol) and will only permit data transfer using the FTP (File Transfer Protocol).

For additional information about the steps involved in establishing an ISDN connection, please refer to Section 3 - Getting Started.

In addition to your telecommunications connection, you must acquire the appropriate hardware for your EDI system. EDI hardware falls into two categories: Telecommunications and translation.

2.4.1 Telecommunications Hardware

Once your telecommunications method has been determined, you will need to purchase the appropriate supporting hardware. For example, a trading partner with a small loan volume may only need an asynchronous modem and a regular analog phone line, while a trading partner with large loan volume may need an ISDN line, a network terminator, and an ISDN modem. As you can see, the telecommunications devices will vary significantly from trading partner to trading partner.

The hardware required for your organization's translation system will depend on the translation software you choose. Available translation software packages can run on almost any system from a 486 PC to an enterprise-wide mainframe. Factors for determining which software package and hardware are best for your organization would generally include loan volume, cost constraints, and your current technical architecture.