Fannie Mae Wednesday launched a pilot program with the Department of Housing and Urban Development and PMI Services Co. to test a software system for underwriting FHA mortgage loans.
The program will involve 12 lenders who make loans under HUD's FHA mortgage insurance program. They include Charter One Mortgage Corp. (formerly American Home Funding), CrossLand Mortgage, GMAC, and the New Jersey Housing Finance Agency.
Lenders will process 2,000 to 5,000 applications using Fannie Mae's automated underwriting system and PMI's system for FHA-insured loan underwriting to check eligibility, documentation requirements, and loan limits.
PMI's system will predict the chances of default by using a risk-based statistical model.
HUD will evaluate whether use of the software expands access to mortgage credit for low- and moderate-income borrowers, aids in the prevention of discrimination against borrowers protected by the Fair Housing Act and the Equal Credit Opportunity Act, and reduces the cost and time of originating FHA-insured mortgages.