Seeking to nip delinquencies in the bud, a number of mortgage servicers have begun using portfolio-monitoring systems developed by Fannie Mae and Freddie Mac.

The lenders are using the systems to identify their highest-risk loans and to plan efficient collection efforts. Lenders generally give the tools high marks but say it would be easier to use one system instead of two.

Freddie Mac says that its system, introduced in June, is now used for 40% to 50% of the loans that have been sold to the agency. Fannie Mae's, rolled out in September, is already being used for about 30% of the loans sold to it, a spokesman said.

"Both of them help identify the loans that have the highest probability of foreclosure or default," said Bob Caruso, senior vice president at Norwest Mortgage.

The systems, he said, help Norwest reduce operating costs and investor losses, and build better customer satisfaction.

Freddie Mac's EarlyIndicator was developed with Mortgage Guaranty Insurance Corp. It consists of software that produces two types of risk scores: one for borrowers overdue by just one payment, the other for more seriously delinquent loans.

Fannie Mae's Risk Profiler works in coordination with Trans Union Corp., the credit reporting agency. Servicers send data files to Trans Union, which in turn develops risk profiles and advises lenders how to divide the loans into high-risk and low-risk groups.

At HomeSide Lending Corp., the nation's seventh-largest mortgage servicer, both systems are used.

HomeSide's goal is to improve its overall collection strategy, said Bill Glasgow, executive vice president. To that end, he said, HomeSide would like to see a standard approach developed by both Fannie and Freddie. Both systems, he added, are an improvement over HomeSide's previous methods for tracking these loans.

Mr. Glasgow said he hoped the two agencies "will collectively look at what they're trying to do and agree that there is a best practice that can be followed. At the end of the day, I feel that the two programs will render a very similar result."

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