Mortgage Companies and Information Technology
There was a time when a person decided whether or not
you got a mortgage loan. While that did provide personalization,
discretion and general goodwill on behalf of the mortgage
company, it did result in a very time-consuming approval
process, and it could well take several months before
a decision was reached.
Today, information technology has changed the face
of mortgage companies, with preliminary decisions being
made primarily by computer programs. Automated underwriting
systems have been examining loan applications, using
computerized models since about 1995. The goal of these
programs is to simplify the approval and underwriting
process for lenders, and minimize delays for consumers.
Today, about three-fourths of mortgage companies use
computerized approval programs.
The most common of these automated programs are Desktop
Underwriter and Loan Prospector, both of which were
created by Fannie Mae and Freddie Mac. Lenders who resell
their loans to these two mortgage companies fill out
a computerized application, and send it to either Fannie
or Freddie through their network. The agencies’
computers then make a recommendation to the originator
in less than two minutes. Another advantage of this
automation is that the documentation requirement for
the borrower is streamlined.
In addition to automated underwriting, mortgage companies
are spending more on information technology in general.
In 2004, mortgage companies are expected to spend 47
percent more on technology than they did in 2003; technology
that has become essential today to comply with new regulations,
automate risk management and make better decisions,
and to remain competitive and offer consumers a broad
array of choices and conveniences. Internet technology
has also come to play a major role in the mortgage industry,
with virtually every mortgage company having at least
a minimal Web presence, and some mortgage companies
operating entirely online.