Mortgage Guaranty Insurance Corp. is offering to forward to Fannie Mae the loan applications the insurer is evaluating in behalf of lenders.

Once MGIC's contract underwriters approve a loan application to the lender's specifications and for insurance coverage, the application will go through Fannie Mae's automated underwriting system, Desktop Underwriter.

And once Fannie - formally the Federal National Mortgage Association - approves a loan, the lender can sell it to the government-sponsored agency.

The insurer evaluates about 15,000 loan applications a month as a subcontractor for large and small lenders, said Goeff Cooper, an MGIC spokesman. MGIC's business in such contract underwriting has more than doubled in the last year, Mr. Cooper said.

MGIC says the capability should be attractive to lenders because they can save time and money by getting underwriting, mortgage insurance, and Fannie Mae approval simultaneously. Another benefit, the company says, is making underwriting a fixed cost, invulnerable to fluctuations in the market.

Mike Williams, senior vice president for customer applications and technology integration, said he the automated underwriting should result in smoother and more predictable loan decisions than would be the case with manual underwriting, which can vary greatly depending on the individual underwriter.


PMI Mortgage Insurance Co. said it has begun printing mortgage scores generated by its automated underwriting system on all its insurance commitments.

PMI says the practice "will enable lenders to visually and objectively assess a loan's relative likelihood of default and enhance their ability to manage portfolio risk and enjoy stronger secondary market executions."

The company says its automated system is the only one recognized by three Wall Street rating agencies - Standard & Poor's, Fitch Investors Service LP, and Duff & Phelps Credit Rating Co. - as a tool to reduce credit enhancement levels for some mortgage-backed securities.

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