Home buyers will soon be able to close on their mortgages at half the current cost, a key housing finance exceutive has predicted.

Thanks largely to the greater efficiencies available from electronic commerce, Freddie Mac President David Glenn told a recent Mortgage Bankers Association conference that they "can count on faster, simpler mortgage originations at half the cost."

Later, Paul Peterson, another officer in the company, which buys loans from local lenders and packages them into securities for sale to investors worldwide, told reporters covering the event that most charges incurred by borrowers -- everything from loan origination fees to processing costs -- can be "significantly streamlined."

Peterson ventured that the average cost to produce a loan is about $1,500 on average. And within five years, that amount would be cut to $750.

He also "fully expects" that the cost savings will be passed on to consumers rather than held by lenders as profit. "Historically, there's always a lag," he advised. "But eventually, any amount lenders try to keep for themselves gets competed away."

Freddie Mac is one of two federally chartered but publically owned corporations charged with bringing liquidity to the mortgage market. Fannie Mae is the other, larger company. And it, too, had a lot to say at the San Diego conference.

One statement that wowed the audience was that the company expects to purchase $400 billion worth of mortgages this year without touching any of them with a human hand -- or eye, for that matter.

That's the volume of loans Fannie Mae anticipates it will underwrite and process electronically, Vice Chairman Jamie Gorelick said. The reason: Even in a declining market -- loan production is off because of rising mortgage rates -- more and more lenders are using the Internet to gain approvals for their mortgages and then sell them to Fannie.

Some 1,000 lenders are processing 60,000 applications a week on the company's automated underwriting program, Gorelick reported.

Published: May 16, 2000

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When Lew Sichelman first started writing about housing in 1969, he was the youngest real estate writer in the country. Now, 37 years later, he's one of the oldest -- and most decorated. He has been rated the top housing columnist in the country by the National Association of Realtors as well as by his peers in the National Association of Real Estate Editors. Indeed, NAREE has recognized his work on numerous occasions. One year - due to his advancing age, he can't recall which one - he earned top honors in the annual NAREE Journalism Contest in three out of the four major writing categories. It was the first time one writer has won so many NAREE awards in a single year. Known for his ability to make even the most difficult topics understandable, Sichelman also has been honored by the National Association of Home Builders and the Mortgage Bankers Association. He began providing in-depth coverage of and consumer-oriented information about housing and housing finance at the Washington Daily News, where he was real estate editor. He held that same position for nine more years at the Washington Star, which purchased the News in 1972. The Star, a so-called "writer's newspaper" which also had the misfortune of being an evening paper, was put out of its misery in 1981, and Sichelman, who had begun self-syndicating his column in 1978, decided to become a full-time columnist. Today, his column, "The Housing Scene," is distributed by United Media to newspapers throughout the country. He also is on the staff of National Mortgage News, an independent newspaper which is considered the bible of the mortgage business. And he writes for numerous other publications, including MarketWatch.com, where he answers readers questions once a week, Sports Illustrated (don't ask), RealtyTimes.com, BigBuilder and others. Sichelman is married, the father of five and grandfather of eleven.