SAN FRANCISCO -- Heating up the the technology race, Freddie Mac is offering fresh details about its planned automated underwriting system.

The system is being tested by three lenders, and five others will join the pilot shortly, agency executives said at a conference here. One lender on the system, Monument Mortgage of Walnut Creek, Calif., told reporters that loans can be approved in as little as five minutes.

Addressing the Western Secondary Mortgage Market Conference here, Freddie Mac officials said they would launch an electronic network that lenders can use to send loan data from their origination systems to the automated underwriting system at the agency.

The network will also link lenders to credit bureaus, mortgage insurers, and in the future, appraisers. Both the network and the underwriting system will be available to all lenders next year.

Federal Home Loan Mortgage Corp. officials emphasize that they are building an "open" system that will allow all market participants to link their existing technology with that of Freddie Mac and others in the business.

So far, the officials said, the agency has worked with five large software companies whose origination systems are widely used in the industry to determine just how their systems can be integrated into the Freddie network.

Freddie Mac contrasts its approach to that of Fannie Mae, which will operate a similar network and is also developing an origination and underwriting system. Many in the industry fear Fannie's origination system will edge out other systems and become a prerequisite to doing business with the agency.

Despite their commitment to an "open" system, Freddie executives are still wrestling with the thorny issue of whether arch-rival Fannie Mae will be asked to join their network.

The Officials indicated that lenders are pressing them to include Fannie in the network. But putting Fannie on the network would erode any edge Freddie might gain by having its network up and running before Fannie.

David Glenn, president of Freddie Mac, said only that the agency had not ruled out inviting Fannie onto its system.

Freddie Mac plans to start testing an automated appraisal system at American Liberty Corp., Oakland, Calif., later this month.

Speculation continues to build on Fannie's system. One source maintained that if Fannie was also building a so-called open system, it would appear to be far behind Freddie Mac, because it is not known to be working with any of the major companies that provide origination systems.

William E. Kelvie, executive vice president at Fannie Mae, said the company is committed to an open system but has not reached a point where it would work with software providers to see how other origination systems could fit into Fannie's network.

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