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How Fannie Mae is Changing the Mortgage Industry with Tech

Since the housing crisis of 2008, Fannie Mae has faced significant challenges. The cost of mortgage origination has more than doubled, leaving Fannie Mae looking at ways to slash expenses. At the same time, more stringent requirements have left lenders with more hoops to jump through before approving a mortgage. New technical investments could solve both of these issues-here are the latest developments.

 

Day One Certainty Initiative

During the 2017 Mortgage Bankers Association Convention and Expo held in Denver, Colorado, Fannie Mae unveiled its new “Day One Certainty” initiative. Designed to streamline the loan approval process, Day One Certainty makes it possible for lenders to quickly validate an applicant’s income and employment information.

The program does this by tapping into The Work Number™, a database powered by Equifax. Within seconds, a loan officer can determine an individual’s employment status, salary, and work history.

Assets can also be quickly verified by using AccountCheck™. This program authenticates bank deposits and personal assets, yet is secure enough to prevent fraud or the unauthorized disclosure of sensitive information.

Effect on Fannie Mae

Fannie Mae is a Government Sponsored Enterprise (GSE) responsible for securitizing mortgages. As part of their agreement, profits are diverted to the Department of the Treasury. According to CEO Timothy Mayopoulos, Fannie Mae earned $3 billion in revenue during the second quarter of 2017. The agency plans to turn over all or most of it to the treasury by the end of the year.

A more streamlined approach to mortgages is expected to keep Fannie Mae out of the financial hot water it found itself in nearly a decade ago. The organization announced that it expected to “remain profitable on an annual basis for the foreseeable future.”

Digital Mortgages now Possible

Their commitment to technical investments means that Fannie Mae is now able to offer fully digital mortgages. With a digital mortgage, face-to-face meetings take place via phone or Skype, and documents are electronically uploaded to a secure website. Applicants can then log in at any time to check the progress of their loan or to provide additional information. Saving time and eliminating cumbersome in-person meetings is something that millennials in particular find very attractive.

Tech Investments Also Extend to Servicing

Right now, Fannie Mae is placing most of its technical emphasis on loan originations, as that is where their biggest costs lie. However, they plan to extend that effort to include mortgage servicing as well. According to Mayopoulos, “We are devoting (our) attention to servicing, we are in the exploration process now.” Thus far, Fannie Mae has not release any timeline for implementation, nor have they announced what those new servicing initiatives might consist of.

These new changes at Fannie Mae will ensure the organization can continue to help people realize the American dream of home ownership. At the same time, loan applicants will find the process a little less strenuous than in years past. In other words, the new technical initiative by Fannie Mae is a win-win situation for everyone involved.

 

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