In a move to capture more business from lenders, Fannie Mae and Freddie Mac will slash the fees they charge for evaluating loans.
While some lenders are applauding the move, saying it will cut their costs, others wonder if it is the first step toward a mandate by the government-sponsored agencies to use their automated underwriting systems.
The chairmen of both agencies on Monday announced separate initiatives to reduce fees that now run about $100 per loan, for running applications through the systems.
The systems evaluate loans to determine whether or not they meet the agencies' standards for purchase and subsequent resale into the secondary market. While cost savings have not been disclosed, the agency executives indicated the fees might drop by as much as 50%. Each is pursuing its cost- cutting program separately and expects to have policies in place by October.
The development will mean "cost and time savings for consumers and greater efficiencies for mortgage lenders," said James A. Johnson, Fannie Mae's chairman.
Mr. Johnson and Freddie Mac chairman Leland C. Brendsel disclosed plans during separate speeches at the Secondary Marketing Conference of the Mortgage Bankers Association.
"We want you to find the value of using our system so compelling that everyone will use it," Mr. Brendsel told about one thousand mortgage bankers. Mr. Brendsel said he envisioned use of Freddie's system "within a year" accounting for 100% of the loans the agency purchases.
Privately, some lenders expressed concern that the developments amounted to mandate for requiring lenders to use the systems if they want to do business with the agencies.
Mr. Johnson emphasized that there was no mandate to use the system, but said he was hopeful lenders would see the benefits and embrace the lower cost service.
Peter Maselli, a technology vice president for Freddie Mac, said he could understand some lenders' resistance to change. But said "Freddie Mac believes lenders will see the benefits of using the system."
Some lenders readily embraced the development. "This will free lenders up to spend more time with borrowers" instead of spending a lot of time on underwriting details, said Palmer T. Heenan, senior vice president of Mortgage Access Corp., Morris Plains, N.J. "I see it as a very positive step."
