Two of the most prominent names in home lending have decided to join forces and create a new default management system for mortgage servicers.

Freddie Mac, formally the Federal Home Loan Mortgage Corp., and MGIC Investment Corp., the nation's largest private mortgage insurer, will jointly market a product called Early Indicator.

Servicers use default management products to predict the likelihood that a loan will go into foreclosure.

Officials at the two companies said the model will combine the best features of MGIC's loss mitigation score and Freddie Mac's Payment Prospector.

The joint effort "makes good sense rather than both of us spending money to come out with competing products," said John R. Hoff, vice president of claims for Milwaukee-based MGIC.

MGIC and Freddie Mac each owns half of Early Indicator. But Paul T. Peterson, senior vice president in Freddie's servicer division, did not rule out the possibility of other companies' investing in Early Indicator.

"Our hope is, there will be other investors that will join with this and endorse the product," Mr. Peterson said. Early Indicator is to be released in a few weeks.

Nine servicers-including the three largest in the nation, Norwest Mortgage, Countrywide Credit Industries, and Chase Manhattan Mortgage-have already agreed to use the new model in their collections operations.

Ron McCord, president of the Mortgage Bankers Association of America, commended MGIC and Freddie Mac for their alliance. He has stressed the importance of standardizing technological platforms in the mortgage industry.

"This payment behavior model marriage continues to move servicers toward greater standardization and at the same time should significantly reduce collection costs," Mr. McCord said.

The MGIC-Freddie alliance is another example of the recent push toward collaborative technological efforts in the mortgage industry. Mortgage Electronic Registration Systems Inc., or Mers, for example, is a company owned by a group of more than 30 companies in mortgage lending, including Freddie Mac.

Mers operates an electronic registry that is to track the transfer of mortgage servicing and ownership rights. Norwest Mortgage will be the first company to go on-line with the system and is set to do so in March.

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