Lights, Camera, 30-Minute Loan Approvals

A wholesale lender in Detroit is using the Federal Home Loan Mortgage Corp.'s automated underwriting system and its own video conferencing system to speed loan approvals.

First Security Savings Bank has added the teleconference element to Freddie Mac's Loan Prospector system for on-the-spot approval to borrowers already preapproved by loan officers.

Three hundred correspondent lenders are using First Security's combination system, according to Michael Hillman, assistant vice president. First Security also uses the system in its 23 retail offices in Michigan, Ohio, and Indiana.

Mr. Hillman said 98% of the loans preapproved to go through the system win underwriting approval, most within 30 minutes.

"We eliminate much of the documentation and are able to liberalize underwriting guidelines," he said.

The system lets the potential borrower and the underwriter discuss what is needed for a loan to be approved. The combination of tools ensures that the loans will be accepted by Freddie Mac and allows borrowers to know immediately if they qualify, Mr. Hillman said.

"The point is peace of mind and certainty to all involved in the transaction, rather than the lengthy process previously needed," he said.

The use of videoconfercing in mortgage originations has been in the spotlight in recent weeks.

A company called Virtual Realty Network Inc., Newport Beach, Calif., has been offering a conferencing system for originations with support from Intel Corp.'s video technology.

Major lenders such as Countrywide Credit Industries, Pasadena, Calif.; Mellon Bank Corp., Pittsburgh; and PHH Mortgage Corp., Mt. Laurel, N.J., are expected to use the Virtual Realty system, which will be placed in real estate offices across the country.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER