A mortgage insurer that has its own automated underwriting system may soon let its customers use competing systems from Fannie Mae and Freddie Mac.
The PMI Group announced a pilot program in which a client, HomeSide Inc., will have access to Fannie Mae's Desktop Underwriter and Freddie Mac's Loan Prospector. PMI performs contract underwriting for HomeSide, the nation's fifth-largest originator of home loans.
San Francisco-based PMI is not the first mortgage insurer to offer its contract underwriting customers access to Fannie Mae's and Freddie Mac's systems. But observers said the decision was a significant one for PMI because its PMIAura system competes with Desktop Underwriter and Loan Prospector.
PMI is regarded as one of the more technologically advanced companies in the mortgage insurance industry. Its willingness to offer access to the government-sponsored enterprises' systems demonstrates lenders' increasing acceptance of Desktop Underwriter and Loan Prospector.
In fact, Gene Campion, PMI's vice president of national underwriting, said the decision to start the program came as a result of lenders' requests that PMI provide access to the two GSEs' automated underwriting systems.
Mark Johnson, executive vice president of HomeSide, said the Jacksonville, Fla.-based lender already has similar arrangements in place with other insurers including MGIC Investment Corp., CMAC Investment Corp., United Guaranty, and RMIC.
"PMI needed to offer this as another tool for their customers," Mr. Johnson said.
Many lenders farm out the loan-underwriting chores to mortgage insurers, which underwrite them on a contract basis. Most insurers have their own mortgage scoring software to rate the riskiness of the loans.
HomeSide had been using PMIAura for its retail originations and will continue to do so.
But according to Mr. Johnson, it made more sense for HomeSide to have loans originated through wholesale channels processed by Loan Prospector or Desktop Underwriter because of the agencies' underwriting standards for these loans. HomeSide is predominantly a wholesale lender.
Mr. Campion said most large lenders have expressed interest in the program and that PMI should open the program to all of its contract underwriting clients by the beginning of July. He added that lenders will still be able to process loans through PMIAura.
"We still expect PMIAura to be a valuable addition to the Loan Prospector and Desktop Underwriter systems," Mr. Campion said.