Written By: Joel Palmer, Op-Ed Writer
As 2017 winds down, officials at Fannie Mae may not be able to look forward to reform measures anytime soon but the government-sponsored enterprise (GSE) appears to have a bright feature after a busy year of initiatives.
At the end of October, Fannie unveiled a trio of initiatives it said will “build on the strong foundation” of its Day 1 Certainty program.
Launched last fall, Day 1 Certainty “enables more efficient risk management and brings greater speed and simplicity to lenders and borrowers” in the appraisal process, which means “potential time and cost savings in loan originations.”
With Day 1 Certainty, appraised value can be accepted up front to give lenders freedom from representations and warranties. This is accomplished with a qualifying risk score from Fannie’s Collateral Underwriter risk assessment application, and a recommendation of Approve/Eligible from Desktop Underwriter, the company’s mortgage underwriting system. Fannie says that approximately 60 percent of appraisals qualify for representation and warrant relief on appraised value.
The latest initiatives announced by Fannie include:
Single Source Validation. This program is currently in pilot status with an expected rollout in 2018. It enables lenders to validate a borrower’s income, assets and employment with a single report from an approve vendor. It is designed to save mortgage processors and underwriters time and money while reducing the amount of documents that borrowers need to provide.
A new Application Programming Interface (API) platform. Fannie says the new platform, which is also in pilot status with a schedule rollout of next year, will make it possible for lenders of all sizes to easily plug into Fannie Mae data and technology solutions so they can quickly access the full set of DU Messages data – driving efficiencies in their processes.
New Servicing Marketplace. This service is designed to connect servicers and sellers interested in partnering with each other for servicing transfers when sellers sell loans to Fannie. The organization says this initiative willoffer transparent pricing, a standardized process, and standardized data requirements when a loan is sold to Fannie Mae. It’s scheduled to be available next month.
Fannie said these solutions “will help make the housing finance system stronger and safer while meeting customers' needs by simplifying the process, increasing certainty, and lowering costs.”
These initiatives build on a busy year for the GSE:
In early October, Fannie Mae announced a partnership with the New Hampshire Housing Finance Authority (NHHFA) to provide affordable finance options to Fannie-approved Resident Owned Communities (ROCs) in the state. The program could eventually be duplicated in other states to improve access to mortgage financing for manufactured housing.
In April, Fannie announced an initiative to help homebuyers with student loan debt qualify for mortgages. The program included a student loan cash-out refinance option, the exclusion of debt paid by somebody else from a borrower’s debt-to-income ratio, and the ability of lenders to accept student loan payment information on credit reports.
According to its monthly summary report, Fannie Mae's book of business increased at a compound annualized rate of 2.7 percent in September. The organization’s mortgage portfolio totaled $245 billion in September, up from $244 billion the month before but down from last year at this time time when it was $306 billion. The GSE completed just over 6,000 loan modifications in September.
In addition, the report shows that serious delinquencies have been trending down for the year. A year ago, the serious delinquency rate was 1.24 percent; in September of this year it was 1.01 percent.
About the Author
As an NAMU® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.