Fannie Mae's patent loan customization technology will be available to all lenders, though it won't fully be in the public domain.
Curtis P. Lu, Fannie senior vice president and principal deputy general counsel, conveyed such message in a letter Tuesday to seven mortgage industry groups, including the Mortgage Bankers Association, American Bankers Association and the Consumer Mortgage Coalition.
The technology will be available to the lending industry on a "non-exclusive and royalty-free basis," Lu said, noting that the company has not yet developed the process and technology to enable the patented innovation and has no current plans to do so.
Fannie's letter follows trade groups' complaints that the patent on the mortgage giant's technology, which matches borrowers with loans that are designed to meet their needs and qualifications, might stifle market innovation.
MBA expressed concern over the many processes used by lenders and others currently covered by the patent cover. The group said the patent could even cover initiatives under development.
Lu reminded the groups, however, that, like all financial services companies, Fannie was not immune to patent infringement claims. Therefore, it was a "reasonable and prudent" business decision to protect its intellectual property assets.
"While Fannie Mae has a strong corporate interest to protect its intellectual property, it also has an interest in fostering innovation that would facilitate the secondary market," the Fannie executive added. "We believe our actions with respect to the patent demonstrate our commitment to supporting innovation in the mortgage industry.
"We would welcome the opportunity to work with you and your members to encourage the development of a cooperative system of intellectual property licensing in the mortgage finance industry so that the industry can freely innovate and use patented technology of all parties without fear of infringement risks."