Transforming, Reforming the GSEs
DENVER–Freddie Mac and Fannie Mae came to the Mortgage Bankers Association’s Annual Convention & Expo here to discuss their “transform and reform” stories.
The government-sponsored enterprises also discussed initiatives to simplify the loan origination process and make the housing finance system stronger and smarter.
“We want to serve our customers–both single-family and multifamily–now and into the future,” said Freddie Mac CEO Donald Layton. “We act like we have five or 10 competitors, not just one. We will work with you to build a housing finance system that is sustainable; this is our ‘transform and reform’ story.”
Layton said Freddie Mac is “reimagining” the mortgage business to deliver a better housing finance system–“one that moves risk away from the taxpayer, attracts true private capital, provides market discipline and reduces systemic risk.”
Fannie Mae President and CEO Timothy Mayopoulos noted he announced the firm’s Day 1 Certainty initiative exactly one year ago at the 2016 MBA conference. “Since then, more than 1,000 lenders have signed up for one or more of our Day 1 Certainty services…and so far, lenders have delivered more than $300 billion in loans with one or more Day 1 Certainty features,” he said.
Mayopoulos said lenders using Day 1 Certainty have reported cutting the application-to-close cycle time by 10 to 20 days. “And by saving time, they are also reducing costs,” he said.
Layton noted Freddie Mac added automated collateral evaluation–ACE–to its Loan Advisor Suite on Sept. 1. If ACE determines the lender’s estimated value of the home is acceptable, the lender can receive immediate representation and warranty relief upon delivering the loan to Freddie Mac. Borrowers may see savings approaching $500 and closing times can be reduced by up to 10 days if ACE determines a traditional appraisal is not needed.
Mayopoulos said Fannie Mae will soon introduce single-source data validation. “Single source is the next step in the evolution of data validation,” he said. “With single source, you will be able to validate many borrowers’ income, assets and employment by running a single asset report. One. Not two or three.”
Fannie Mae plans to make single-source validation available to all its customers in 2018, Mayopoulos said.
“In making your life easier, it will also make the borrower’s life easier,” Mayopoulos said. “Think of all the paper borrowers have to gather today to get a loan: pay stubs and bank statements, all sent through a fax machine that no one owns anymore…With single-source validation, you and your customers can make it go away just by accessing their bank data. This represents a major step forward for everyone.”
Fannie Mae also introduced a new servicing marketplace at the MBA Convention, intended to better match sellers with servicers. “It will provide you with transparent pricing, a standardized process and standardized data requirements,” Mayopoulos said.
Mayopoulos said single-source validation, a servicer matchmaking service and a new-for-2018 API platform that will give lenders a convenient “app” to plug directly into Fannie Mae’s data and technology will pull the mortgage industry into the future. “They pull us toward a secondary mortgage market with less friction, less cost and better service for you, a mortgage process that’s faster and easier for everyone and a housing finance system that is stronger, safer and smarter,” he said.
