Fannie Mae Utilizes Technology to Achieve Housing Goals
September 24, 2015
Fannie Mae has built a strong and flexible technology organization in order to help the Enterprise more efficiently achieve its goals, which are to help provide people with access to affordable mortgage credit and to reduce risk to the taxpayer, according to a commentary from Bruce Lee, SVP and Chief Information Officer at Fannie Mae.
“When we announced in December 2014 that Fannie Mae would again purchase loans with as little as 3 percent down payments, our technology organization worked to update our systems quickly so that lenders could begin delivering these loans to us within days,” Lee said. “Thousands of families have benefited from this loan option.”
Today, various Fannie Mae technology tools that run on an interconnected technical infrastructure are used by lenders and servicers to help at-risk borrowers prevent foreclosure, to underwrite mortgage loans, and to subsequently check the quality of those loans.
Those tools include:
- Desktop Underwriter (DU), which has been used for more than 20 years, and has been continually enhanced during that time. DU is a comprehensive underwriting system that helps lenders evaluate loans and determine if those loans meet the credit risk standards and eligibility criteria set forth by Fannie Mae. It has helped lenders provide mortgages to millions of Americans at an increased speed and lower cost.
- Collateral Underwriter (CU), which builds on the success of DU. It helps reduce risk for Fannie Mae and lenders by helping lenders evaluate appraisals for loans and ensuring values are appropriate and property information is accurate. Lee said that CU “is a key part of building a stronger housing system for the future. We recently integrated CU with DU to further support our lenders’ risk management and underwriting capabilities.”
- EarlyCheck helps lenders identify potential problems earlier in the process, which provides greater certainty that the loan will meet Fannie Mae’s eligibility requirements. Lenders who use EarlyCheck have the opportunity to fix potential issues prior to selling the loan to Fannie Mae, which reduces the risk of repurchase.
- Servicing Management Default Underwriter (SMDU) helps those who service Fannie Mae loans determine what loss mitigation options are available to borrowers who are struggling to make mortgage payments. With SMDU, servicers can make real-time decisions to help those borrowers prevent foreclosure through any number of loss mitigation options (loan modifications, short sales, repayment plans).
Technology is also playing a key role in reducing Fannie Mae’s risk profile, Lee said.
“In order to build our Connecticut Avenue Securities (CAS) offering, which allows investors to take some of the credit risk that Fannie Mae traditionally held on loans in its book of business, we had to build a new set of tools, platforms, and reporting capabilities,” he said. “In addition, technologies such as Desktop Underwriter and Collateral Underwriter help to reduce risk on the loans that Fannie Mae acquires. These tools have been instrumental in transferring a portion of the credit risk on nearly $400 billion of mortgages since 2013.”