Tool Brings Lenders Freddie Mac Underwriting

C.C. Pace Systems Inc. is testing software that interfaces with the Federal Home Loan Mortgage Corp.'s automated underwriting system.

Officials said the software, being tested at Zions Mortgage Co., Salt Lake City, works with Freddie Mac's Loan Prospector system, which helps assess loans to be purchased in the secondary market.

The software, dubbed Golden Gate, formats loan information for processing by Loan Prospector. It transmits the data over Goldworks, Freddie Mac's value-added network.

The results from Loan Prospector are then retrieved and reformatted into the lender's origination system.

"The target market, we hope, is a fairly wide and diverse group of lenders in the mortgage industry," said Craig Hughes, a product manager with C.C. Pace Systems, which is based in Fairfax, Va.

Barbara Smiley, an analyst with Tower Group, a Wellesley, Mass.-based technology consultancy, said the loan origination software market is highly fragmented, with at least 70 different origination products. Many of them are small, PC-based systems, which is "where this might find a home."

But she added such software "probably fills a very, very narrow niche," because many large lenders have - or will soon develop - interfaces to both Loan Prospector and the Federal National Mortgage Association's products.

But Mr. Hughes said there is more of a market for interface software "than one might think," because many lenders use either in-house origination systems or greatly modified off-the-shelf versions that cannot accept new releases.

He said still more might have "broken off relations with their vendors and are running outdated software; 30% to 40% of the lender institutions fall into these categories."

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