When Colorado Springs Realtors have buyers who are ready to get pre-qualified before looking at homes, many call mortgage broker Cheryl Dingwell of Citadel Mortgage.com. She offers an advantage that she says no other broker in her area does - 5-minute pre-approvals, thanks to Freddie Mac's newest pre-approval tool, Loan Prospector on the Internet.

"My Realtors have the customer call me, and I talk to them over the phone," explains Dingwell. "I go into the Internet to the Freddie Mac webpage, and into a page that is password-protected and input the data. Then I call them back in five minutes with a pre-approval."

Loan Prospector promises to revolutionize the mortgage application process, at least as far as the Realtors and mortgage brokers are concerned who don't want their borrowers turning to the Internet by themselves. It's a particularly useful tool to independent brokers such as Dingwell because it is fast and requires only three documents from the borrower. Realtors like it because they can work with a broker whom they know and still get real-time Internet-quick service for their buyers.

Loan Prospector on the Internet represents Freddie Mac's effort to improve busines-to-business loan originations. Quick pre-approvals are nothing new on the Internet, but to date, they have been marketed toward consumers who can apply for a loan online at sites such asiqualify.com and E-Loan.com.

"When the broker inputs the information on the borrower's documents," says Patricia McClung, vice president of Loan Prospector marketing, "they can also put in what the borrower wants, how much they want to put down, an estimated price range for the home, and the type of mortgage product, or they can try all types of loan products. The broker can run the same transaction numerous times to see which loan is best."

Speedy pre-approvals by a mortgage broker means that Realtors stay in the loop with buyers, without losing them to the Internet, where buyers can consume a lot of time surfing sites, learning about loans, and comparing loans.

Realtors can also save themselves the time of pre-qualifying a customer themselves, which many do to jump-start the home shopping process. This is a practice that McClung discourages. "Old methods of pre-qualifying don't work anymore," she says. "We consider more risk factors. We look at how well the borrowers pay their bills, income, debts, collateral, and how they offset each other so that many more borrowers get approved. Cruder tools rule out potential customers or put them in programs where they don't belong such as sub-prime, a more expensive loan than it needs to be."

Realtors also will know instantly whether they have a customer who is ready to buy before they show any homes. "I work out of my home and take care of customers when the timing is convenient for them," says Dingwell. "They don't have to leave work.

"Right now this gives me a competitive edge," adds Dingwell," because I am one of the few brokers who is going on to the Internet to do this. There is limited processing. Once I get the Loan Prospector pre-approval, I go and meet the customer, or have them meet me, get the documents, and we're done.

Last but not least, Realtors can promote the convenience and service of using a Loan Prospector broker. "I originate the loan, process it, and close it, so the Realtor and the customer only has to speak to one person," says Dingwell.

The loans also seem to be a virtual sure thing. In processing over 25 loans this way, Dingwell has never had a borrower turned down.

"Loan Prospector is not just for conforming loans," points out McClung. Originators can evaluate and process the vast majority of home loans including conventional, A-minus and Alternative A (Alt A) products. In addition, Freddie Mac claims that Loan Prospector on the Internet is the only automated underwriting service originators can use to evaluate FHA and VA loans with minimal processing requirements.

Over 7,000 independent mortgage brokers are using Loan Prospector on the Internet. For Realtors who would like to meet a broker in the program, they can contact 1-888-LPONWEB and ask for a referral, or they can check to see if the broker to whom they often refer business is in the program.

"It helps Realtors to become educated to the value of these programs," says McClung. "Sometimes a borrower may not look like a good prospect, and we can show them that yes, they are. It saves time, and takes the guessing game out of the process."

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Published: February 9, 2000

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