Fannie Mae and Freddie Mac, the two government-sponsored enterprises that dominate housing finance, have become leading suppliers of software for use by the lenders who sell them mortgages.
The two have been driven in their offerings by competition and by a dogged determination to squeeze costs out of the lending process.
Their software systems have expanded to the point where they now come close to meeting the goal of a seamless start-to-finish process that integrates all aspects of lending.
What follows is a sampling of some of the key offerings from Freddie Mac, formally the Federal Home Loan Loan Mortgage Corp., and Fannie Mae, the Federal National Mortgage Association:
Loan Prospector. An automated underwriting service that uses information from loan applications, credit reports, and property evaluations to evaluate a borrower's ability to pay the mortgage.
The company calls it "an innovative business solution designed to meet lenders' current and future mortgage origination challenges."
Freddie Mac says that because it has geared its credit policy toward documentation that more closely reflects credit risk, Loan Prospector can reduce documentation requirements.
The company's documentation says Loan Prospector can provide a credit decision in four minutes and assessment of the collateral in 72 hours.
Goldworks. A network linking Freddie Mac and other industry participants with lenders. The network provides for easy information exchange among users, including credit bureaus, appraisals companies, and mortgage insurers.
Gold Connection. A system for pricing and selling loans in the secondary market.
Midanet. An automated system for electronically transferring loan data and accounting reports.
Fannie offers a variety of products under the blanket name of MornetPlus. Some of they key offerings:
Desktop Originator and Desktop Underwriter. These twin programs allow lenders to integrate their own systems with those of their brokerage networks and to get quick approvals. Fannie says credit decisions are available in as little as an hour from when the customer walks in the door. It also says the system reduces the cost of originations by an average of 45% per loan from what the costs would be without the system.
Desktop Underwriter uses Fannie Mae guidelines to make the decisions, integrating information from several external sources.
Desktop Home Counselor. Provides homebuyer counseling and education resources for professional counselors. Included are features such as credit and affordability analyses.
Desktop Trader. This software enables lenders, using their personal computers, to view Fannie Mae's current cash prices, receive a cash commitment, and immediately get contract numbers.
Fannie also offers a wide variety of other lender tools, including Guide Express, an on-line underwriting manual; Market Express, which provides mortgage-market information; Property Express, which provides data on property values; and Rate Sheet Express, which enables lenders to distribute fax copies of their rate sheets to their brokers and loan officers.