Capital Mortgage Corp., Raleigh, N.C., introduced an underwriting system at the National Secondary Conference in New York last week. Jumbo loans are those that exceed the limits on loans bought by Fannie Mae or Freddie Mac. Typically, they are for $250,000 and up. GE Capital Mortgage, a subsidiary of General Electric, hopes that a consistent underwriting standard would achieve the following benefits: * Permit more efficient securitization executions. * Create investor confidence in whole-loan trades. * Make delinquency and default characteristics more predictable. * Enhance trading value, shrink due-diligence requirements, and eventually lead to increased efficiencies in the nonconforming sector. Originating lenders that use the system, called IQ (for Investment Quality) Underwriting Certificate, will submit their loans to one of GE Capital's compliance underwriting centers for approval. The underwriting service will be available starting June 1. If an underwriting error is discovered, the certificate will offer a two-year recourse provision to the loan's holder. GE Capital Mortgage will either cure the loan, place deeper primary insurance down to 50% loan-to- value, or repurchase the loan. The recourse program is only available to lenders, conduits, and Wall Street firms that sign a standard agreement with GE Capital Mortgage. Pricing for the service will be different for loans insured by GE and those that are not. Lenders whose loans carry GE Capital primary mortgage insurance will be charged $35 for underwritng. Loans not insured by GE will cost $125 for underwriting. The service will be expanded in the third quarter to include artificial intelligence, mortgage scoring, and on-line imaging access to loan files.

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