In an alliance that creates a new power in the budding business of on-line mortgages, Microsoft Corp., Freddie Mac and several large banks plan to announce today a joint venture that will license Internet-based lending technology to lenders, brokers, and real estate professionals.

Freddie Mac and the home loan units of Bank of America Corp., Chase Manhattan Corp., Wells Fargo & Co., and General Motors Corp. are Microsoft's partners in the new company, dubbed HomeAdvisor Technologies Inc. Freddie Mac's automated underwriting program, Loan Prospector, is embedded in the HomeAdvisor platform.

The new venture is also expected to announce that it has acquired Tuttle Decision Systems Inc., a mortgage technology company that Microsoft owned a large stake in. A Microsoft spokeswoman said Tuttle, which will be merged with HomeAdvisor, will an play integral role in the new company.

"We want to create the platform for the industry," said Bryan Mistele, general manager of Microsoft HomeAdvisor and general manager of the new venture. "And our partners are financially and contractually committed to the adoption of this platform."

Peter Maselli, senior vice president for business development at Freddie Mac, said his company's involvement in the joint venture "gives us implicit advantages that we hope make it more attractive to sell loans to Freddie Mac" than Fannie Mae.

The fact that Loan Prospector is embedded in HomeAdvisor will make it easy to sell a loan originated using the technology to Freddie. Selling the loan to another investor would require "additional steps," Mr. Maselli said.

That competitive advantage, however, may be short-lived. "We would love to work with Fannie Mae," said Mr. Mistele. "This venture is not intended to give one [government-sponsored enterprise] an advantage over the other."

A Fannie spokeswoman would not comment directly on the Microsoft venture. She would only say, "We're going to work closely with our lender partners to help them compete in the new economy."

Freddie's financial investment in the venture is "modest," Mr. Maselli said, but the secondary marketing giant contributed key technological advancements, including customized pricing and automated appraisal engines - tools that Freddie previously shared with only a handful of lenders.

The lenders involved in the new company - Bank of America, Chase Manhattan Mortgage, GMAC-Residential Funding, and Norwest Mortgage - also believe they are gaining an edge.

The HomeAdvisor platform will "enable us to compete more effectively," said Geoffrey Dreyer, a managing director at Norwest Mortgage, a unit of Wells Fargo. He said HomeAdvisor Technologies would in part be a competitor for origination software vendors.

Denis O'Leary, a executive vice president and head of Chase.com, said the partnership is "absolutely strategic to Chase. This is an opportunity to work with other world-class companies to fundamentally [change] how the mortgage business operates."

None of the participants would disclose how much money they are investing in the new company, but Microsoft will be majority shareholder, though one Chase official said, "Everyone is putting in significant amounts. This is not a hobby."

Mr. Mistele said the new company would fill a unique niche, reengineering and fundamentally changing the mortgage process - a sentiment most of the partners agreed with.

Competitors were skeptical. Rick Soukoulis, president and CEO of loancity.com, a competitor of the new venture, questioned how much the new company could change the process. "You're still dealing with the same issues on the fulfillment side," he said. "Norwest is only as good as its local branch."

The announcement comes at a time when the mortgage industry's biggest players have been forming various types of alliances to share technology and capture market share


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