Magazine article American Banker

Fannie to Share Patent with Critics on Loan-Matching

Magazine article American Banker

Fannie to Share Patent with Critics on Loan-Matching

Article excerpt

Fannie Mae said Tuesday that it would make available its patented loan-matching technology to lenders for free but stopped short of promising to meet the industry's demand that it put the patent in the public domain.

The announcement came after a month-long row with mortgage industry leaders, who argued in two October letters to the government-sponsored enterprise that the patent violated Fannie's charter and was unfairly competitive with their constituents' origination businesses.

In a letter to the seven trade groups involved in the dispute, Curtis P. Lu, a senior vice president and the chief counsel at Fannie, wrote that the GSE "has an interest in fostering innovation that would facilitate the secondary market."

Fannie plans to make the technology, which automatically matches potential homebuyers with the best mortgage rates, available to the lending industry on a "nonexclusive and royalty-free basis," Mr. Lu wrote.

Reaffirming the GSE's previous statements, Mr. Lu said Fannie had patented the information to protect its intellectual property rights but has no plan to develop a program that would use the loan-matching technology.

Some of the trade groups addressed in Mr. Lu's letter said they were hesitant to discuss Fannie's response while their patent attorneys are reviewing it.

"The devil is always in the details on these things," said Anne Canfield, the executive director of the Consumer Mortgage Coalition, one of the trade groups. "You really need to have a patent attorney look" at the letter before deciding what it means.

Laura Armstrong, a spokeswoman for the Mortgage Bankers Association, said, "Upon initial review, we are looking at this as a positive step forward to discuss industry concerns, ... but we have not had a chance to thoroughly review it yet."

Scott Stern, the chief executive officer of the National Alliance of Independent Mortgage Bankers lobbying group, said Fannie's announcement could be favorable for mortgage lenders. …

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