Freddie Mac unveils ‘game-changing’ tools to boost mortgage lenders

New tools designed to provide clarity; improve efficiency, compliance

Freddie Mac is about to arm lenders with more information and feedback about the loans they originate than they’ve ever had before, throughout the entire loan origination process, from the loan application all the way through to servicing.

Building on the set of lender tools it released last year, Freddie Mac is set to unveil a suite of new tools for lenders that the government-sponsored enterprise says will provide lender with “actionable feedback” throughout the loan production process, thereby helping lenders lend more often and with more confidence.

The new tools, which include the additions of Loan Closing Advisor, Loan Product Advisor, and Business Intelligence to the previously announced Loan Advisor Suite, transform Loan Advisor Suite into a flexible, end-to-end loan delivery solution that executives with the GSE say can increase lender efficiency and provide earlier insight into representation and warranty relief.

“We think it’s going to a game-changer for the industry,” Chris Boyle, senior vice president and head of single-family sales & relationship management at Freddie Mac, told HousingWire in an interview. “I think it’s our journey to automation and we’re happy to lead the way.”

According to Boyle, the tools will help usher in a new era for Freddie Mac.

“I believe this with my heart and soul,” Boyle told HousingWire. “I’m a veteran of this company and this is a better Freddie Mac and a better housing finance system.”

According to Boyle, the Loan Advisor Suite is being enhanced with additional tools that will provide lenders and vendors with transparency and certainty about how their loans will be received by Freddie Mac.

Boyle said that the new programs were designed with lenders, ensuring that lenders will be able to trust these new programs to make the manufacturing process more streamlined.

“Lenders will be taking the data they have and sharing it with us earlier in the process through the use of these tools,” Boyle said. “And it’s a great way for them to understand if these loans meet our standards and guidelines.”

And that could lead to more lending, Boyle said.

“At the end of the day, we feel that this should help to expand homeownership because lenders will know, early on the process, whether these loans are eligible for purchase by Freddie Mac,” Boyle said.

“The powerful point about this is that this is before they close the loan,” Boyle said “So they’re running the data through, and this allows them to make any corrections before they close the loan. That will help with a lot of compliance issues.”

According to Andy Higginbotham, Freddie Mac’ senior vice president and head of single-family strategic delivery, the new tools are mutually beneficial for lenders and Freddie Mac alike.

Higginbotham said that when lenders start using the new program, they will be able to cure any loan issues during the origination process rather than post-closing, which will help lenders’ bottom lines and help ensure “clean” loans are delivered to Freddie Mac.

“One of the biggest issues in the industry is loan origination cost,” Higginbotham told HousingWire. “It’s more than doubled since 2008. It’s up to more than $7,700 per loan.

But with this enhanced process, lenders should be able to improve their costs to improve loans via the automation that the Loan Advisor Suite allows for, Higginbotham said.

“The automation takes the chance for error out of it,” Higginbotham said.

“If lenders have manual checklist processes, and many lenders do, they’re manually doing a ‘stare and compare,’ looking at a document and looking at a computer screen to try to match everything up,” he continued. “It’s really about the combination of that certainty with giving them process efficiency. That’s what makes this really compelling.”

It’s not just lenders’ bottom lines that could be helped by these new programs, Higginbotham said. The programs will help lenders remain in compliance with various regulatory standards, including the Consumer Financial Protection Bureau’s TILA-RESPA Integrated Disclosure Rule.

“While Loan Closing Advisor isn’t specifically designed to adhere to TRID, it does do a complete check of the Uniform Closing Dataset that is associated with TRID,” Higginbotham said.

“What’s different about this is that we’re giving lenders a tool to evaluate that dataset in the origination process, not when they deliver the loan to us, but prior to that,” he continued.

“That will give them the ability to see if they have a very clean data file, and then they can do their TRID checks,” Higginbotham said. “One of the biggest issues is that sometimes critical data is just missing and if you don’t have that data, it’s going to fail TRID compliance for sure. So the feedback from the lenders has been really positive about that part of this.”

According to Freddie Mac, the new tools include:

  • Loan Product Advisor, the next generation of Loan Prospector, is the cornerstone of Loan Advisor Suite. The Loan Product Advisor feedback certificate is cleaner, easier-to- understand and shows at a glance a loan’s status and potential for earlier representation and warranty relief. Freddie Mac plans additional functionality for Loan Product Advisor later this year
  • Loan Closing Advisor is designed to evaluate each loan’s closing data for alignment with the Uniform Closing Dataset. Loan Closing Advisor feedback will help lenders resolve data defects prior to closing and reduce repurchase risk
  • Loan Collateral Advisor is also going live as part of Loan Advisor Suite’s summer rollout. Freddie Mac’s Loan Collateral Advisor quickly ranks the likely accuracy of the appraiser’s market value using data submitted to the Uniform Collateral Data Portal and provides real-time feedback and guidance for identifying and resolving appraisal issues. Loan Collateral Advisor’s rules-based engine provides insight into eligibility for earlier collateral representation and warranty relief
  • Business Intelligence is an innovative new capability that pulls data from all of Loan Advisor Suite’s applications into a simple snapshot that lenders can use to monitor transaction data. Business Intelligence displays data at the loan or summary level, for one tool or the entire Suite, and is designed to make pipeline reporting, peer comparisons and trend analysis easier

According to Freddie Mac, the tools will begin a “phased rollout” this summer.

“We designed Loan Advisor Suite with lenders to help lenders focus their resources on specific areas of potential risk, thereby increasing their efficiency and potentially reducing their costs — all while providing greater certainty about the quality of their loans,” Higginbotham said. “Together we achieved our shared objective to give our customers greater certainty, usability, reliability and efficiency in manufacturing high quality mortgages.”

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