Academic journal article ABA Banking Journal

Who's Top Provider of Automated Underwriting?

Academic journal article ABA Banking Journal

Who's Top Provider of Automated Underwriting?

Article excerpt

Two recently released surveys substantiate what till now has been just hearsay--that Freddie Mac's automated underwriting system is more popular than Fannie Mae's. Moreover, commercial banks have a more marked preference than other mortgage lenders for Freddie's Loan Prospector, using it twice as much as Fannie's Desktop Underwriter.

The accompanying table summarizes the survey findings on automated underwriting (AU) received by America's Community Bankers and by SSP/RES Research. ACB surveyed 643 thrifts, 13.6% of which use Loan Prospector, compared with 10.6% that use Desktop Underwriter.

As part of its biennial MORTECH research, SSP/RES surveyed 650 lenders, fairly evenly divided between banks, mortgage banks, and thrifts. Of those using AU, 43.7% chose Loan Prospector, compared with 27.9% that chose Desktop Underwriter. However, when one looks at commercial banks in isolation, 59% use Loan Prospector, compared with 23.8% that use Desktop Underwriter.

Both ACB and SSP/RES found that roughly a quarter of those surveyed use automated underwriting.

The number using AU should double within the next few years, if lenders follow through on their plans. Adding current users to those with specific plans (suggesting a two-year implementation timeframe), SSP/RES anticipates more than 50% usage of AU shortly. Meanwhile, ACB forecasts that 40.3% of thrifts will use automated underwriting (from a secondary market agency) within five years.

The agencies are not the only suppliers of automated underwriting systems, as SSP/RES respondents indicate. …

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