Two major mortgage insurers have unveiled Internet services meant to shorten lenders' wait for insurance commitments.
GE Capital Mortgage Insurance said its service will deliver commitments in minutes. That is down from about an hour, even for lenders with delegated underwriting privileges, said Robert Mullins, a vice president.
Commonwealth Mortgage Assurance Co. makes an even bolder promise in its marketing materials: "Mortgage insurance in seconds."
An insurance commitment shows the lender that the insurer has received the loan data. The delegation of underwriting to lenders means that they effectively enjoy "instant" commitments anyway. But computerizing the final step "cuts down on time in getting back to the borrower," said Steven Schwartz, an analyst at ABN Amro, Chicago.
The General Electric unit, based in Raleigh, N.C., and Commonwealth, based in Philadelphia, announced the services last week. GE's is already up and running. Commonwealth's will be available nationwide in a few weeks, a spokeswoman said.
The services will provide insurance commitments only for newly originated loans, and only to companies participating in a program in which underwriting has been delegated to lenders.
As an option, printed insurance certificate can be sent to the lender's back office.
Mortgage insurance covers the risk of default on loans with low down payments.
Fannie Mae and Freddie Mac generally will not buy loans with less than a 20% down payment unless they are insured.
GE and Commonwealth will also let lenders perform servicing functions- including loan-number changes, servicing transfers, cancellations, and refunds-over the Internet.
And by yearend lenders will be able to submit claims on-line to Commonwealth, said Diane Connelly, a vice president.
The thought of doing such things over the Internet may not sit well with some.
For security reasons, "many lenders may prefer to use closed systems to Internet-based systems," said Mark Constant, an analyst at Merrill Lynch & Co.