Mortgage lenders can now order private mortgage insurance directly through Freddie Mac's automated underwriting system, Loan Prospector.
Mortgage Guaranty Insurance Corp. and Commonwealth Mortgage Assurance Co. are the two companies offering insurance on a real-time basis through Loan Prospector.
A spokeswoman at Freddie Mac, formally the Federal Home Loan Mortgage Corp., said all the mortgage insurers are working with it in order to get their networks linked to Loan Prospector as soon as possible.
Joanne Berkowitz, vice president of credit policy at PMI Mortgage Insurance Co., the nation's third-largest mortgage insurer, said PMI should be ready to go on-line via Loan Prospector this month.
Through the automated underwriting system, lenders can get insurance underwriting decisions in a matter of minutes. Once a loan is submitted to Loan Prospector, relevant loan data are sent to the prospective insurer, and a decision regarding insurance can be made without a lot of time- consuming paperwork.
"We have been doing business through Loan Prospector, but this finally drops all the barriers," said Andy Luczakowsky, Commonwealth's vice president of information services.
A spokesman for MGIC, the nation's largest mortgage insurer, said that lenders had previously had to fax insurance applications to the insurer for credits underwritten on Loan Prospector. MGIC was the only insurer used during the pilot of Loan Prospector.
When a borrower puts less than 20% down on a home, Freddie Mac and the Federal National Mortgage Association, or Fannie Mae, require that the loan be insured by a private mortgage insurer before they can buy it.
The Freddie spokeswoman said the option of selecting mortgage insurance will only be available on the second generation of Loan Prospector. The vast majority of lenders that now use Loan Prospector do not have this new version, she said, but most should by Dec. 31.
Mike Saraullo, Commonwealth's director of customer automation, said Indy Mac, a conduit owned by CWM Mortgage Holdings, is the only lender with current access to the improved version. Troy, Mich.-based Standard Federal, the nation's largest thrift-owned mortgage lender, will soon be ready to link up as well.
Roy Kasmar, chief operating officer of Chicago-based Amerin Guaranty Corp., another mortgage insurer, said smaller and midsize lenders had embraced Loan Prospector more fully than many of the larger mortgage originators. As a result, he said, mortgage insurers that cater to smaller lenders may get an initial windfall.
But most mortgage insurance executives said that if all insurers ultimately offer their products through Loan Prospector, market share shouldn't change much.
Officials of MGIC, Commonwealth, PMI, and Amerin said they also are working with Fannie Mae to offer insurance through its Desktop Underwriter system. Mr. Saraullo added that he expected Commonwealth's link with Desktop Underwriter to be operational in the first quarter.