Getting a mortgage is about to become a quicker, simpler process for buyers of homes in the $200,000 range and up, Fannie Mae announced last week.
Starting next month, the Federal National Mortgage Association (Fannie Mae) will expand its electronic loan underwriting system to include loans of $207,000 or more, known as jumbo loans. The agency said there was no limit on the amount it will underwrite.
Using the Fannie Mae Desktop Underwriter network, a loan officer will be able to take a borrower's application, get an appraisal and credit rating and have the loan approved in 30 minutes or less, said officials of Fannie Mae, the nation's largest source of home loan funds.
Fannie Mae's system and a similar one offered by the Federal Home Loan Mortgage Corp. (Freddie Mac) are expected to revolutionize the way buyers get loans.
The systems should help lenders do away with stacks of paper, speed mortgage approvals and eventually allow loans to close in no more than 10 days. Now it takes 30 to 60 days to settle on most properties.
In the past, lenders have been able to use the Fannie Mae system only for loans of $207,000 or less, which is Fannie Mae's loan purchase limit. About 200 lenders nationally have been using the system, said Michael Williams, Fannie Mae's senior vice president for technology marketing.
But through a joint initiative with Merrill Lynch Credit Corp., the appraisal and underwriting system will be expanded in October to include the larger loans.
"Over time, consumers should see a process that's significantly easier and faster," Williams said.
Lenders can use the Fannie Mae system for jumbo loans to be purchased by Merrill Lynch. Fannie Mae will act as underwriter only and will not purchase loans. Electronic appraisals will be done by Lender's Service Inc., an affiliate of Merrill Lynch.
About 20 lenders who now sell loans of $207,000 and less to Fannie Mae are expected to start using the new system for jumbo loans in a pilot program to start next month.
The venture is a first both for Fannie Mae and Merrill Lynch. It allows Fannie Mae for the first time to offer its Desktop Underwriter system to lenders of larger loans. And it marks the first time that Merrill Lynch, which also originates jumbo loans, will become a large-scale purchaser of loans.
Fannie Mae expects to bring other investors into the system in the future, Williams said.
