The mortgage industry is in the throes of a technological revolution that will shake up lenders before showering them with benefits, a top systems executive at Freddie Mac said.

"It is an uncomfortable time," said Peter Maselli, a vice president who oversees automated underwriting for the secondary-market agency, formally the Federal Home Loan Mortgage Corp.

"This is a period of a lot of innovation, with processes being changed," Mr. Maselli said. "It runs counter in some ways to something that is seamless."

Lenders, Mr. Maselli said, are still grappling with how to put all the technological advances together into a cohesive system. But, he added, the growing pains will be worth it.

He sees new technologies like automated underwriting and networking systems ultimately allowing mortgage companies to tie together now disparate functions like originating, underwriting, processing, servicing, and securitizing. And they will be able to choose which elements of the system they want to link.

The linking will make operations more efficient by improving communication and cutting down on duplicate or even triplicate efforts, Mr. Maselli said.

The technology chief has a prime vantage point from which to view the industry. As a chief promoter of Freddie Mac's automated underwriting system, he has spent the past two years talking to lenders-assessing their mortgage systems and their reservations about the electronic approach to underwriting.

Many larger lenders have signed on for Freddie's system, but not all embrace the product, he said.

Some lenders won't adopt new technology "until competitively threatened," Mr. Maselli said.

He is also finding that a number of mortgage banks, because they lack sufficient support systems, cannot take full advantage of services like automated underwriting.

For instance, a loan officer may use an automated approach to receive quick approvals. But the application could still sit for days in an underwriting department that is not connected to the system.

Other lenders, Mr. Maselli said, are finding that automated underwriting scores have a variety of uses.

Indeed, the information helps Norwest Mortgage build "behavioral scoring" models that servicers use to better track delinquent borrowers, said Robert Caruso, senior vice president of the Des Moines-based lender's loan administration group.

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