WASHINGTON - Two years into its drive to streamline the mortgage process, Fannie Mae has rolled out technology that it promises will help write home loans in an hour.
The agency, formally the Federal National Mortgage Association, said this week that its electronic origination and underwriting systems are now available nationally.
Nineteen lenders have signed on to use one or both of the new systems, and more are expected to follow.
Frank Raines, Fannie Mae's vice chairman, hailed the products as first steps toward "fast, smart, and universal systems that benefit everyone in mortgage finance with lower costs, less paper, and less time wasted."
The agency promises that the electronic loan system will cut lender costs by $1,000 a loan once all its components are in place. This week's introduction of a loan origination system and an underwriting system will save lenders $300 per loan, Fannie Mae said.
Approving the loan electronically takes a few minutes and, along with other on-line information on the creditworthiness of the borrower, will potentially shorten the process from weeks to as little as an hour.
Archrival Freddie Mac, formally the Federal Home Loan Mortgage Corp., introduced its own electronic underwriting system earlier this year.
Neither agency's technology is widely used by lenders yet. But, given the agencies' market power, the technology is likely to take hold soon. Both have promised to waive recourse provisions on loans approved through their proprietary systems. That means lenders won't ever have to buy back the loans they sell to Fannie or Freddie except in cases of fraud.
In the early stages, many lenders are trying to figure out how to integrate agency technology with their in-house systems.
One user of Fannie Mae's system, BancBoston Mortgage Corp. of Jacksonville, Fla., is using the origination system to get loans from mortgage brokers.
Daniel T. Scheuble, executive vice president at BancBoston, said the company was continuing to use its own origination system to write loans in its offices. Fannie's underwriting system would be used for loans it sells to Fannie Mae, and a proprietary system used for others.
At American City Mortgage Corp. in Carson, Calif., Pat Theodora, chairman, said his company was using Fannie Mae's underwriting system to make home loans quickly, often in the living room of potential borrowers. He said about 45% of applications are approved by the system, and that Fannie Mae expects the number to go up.
Mr. Theodora said his company pays a fee of $60 each time it sends in an application, though higher-volume users may get a discount. He said he expects to install Freddie Mac's underwriting system eventually.
