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Fannie Mae: An update on Day 1 Certainty one year later

What we’ve learned and where we’re going

Last October, we introduced Day 1 Certainty at MBA Annual to help lenders cut time and cost out of the origination process, and to help them provide a better experience to their customers.

One year later, more than 1,000 lenders have signed up for one or more of our Day 1 Certainty services. These lenders account for three-quarters of our deliveries through Desktop Underwriter. And so far, lenders have delivered more than $300 billion in loans with one or more Day 1 Certainty features.

Delivering Greater Efficiency

Lenders using Day 1 Certainty have told us they are seeing real and tangible benefits. Some have shared that Day 1 Certainty has cut the time from loan application to final approval from 50 days to 25.

One lender reported that it had reduced capital reserves on Fannie Mae loans by 25% – as less rep and warrant risk ties up less capital.

We’re measuring impact on our side too. Thus far, we’ve seen:

  • 14% average reduction in the time from application to close when assets are validated through DU.
  • 17% average reduction in application to close time for loans with employment and/or income validated.
  • 38% average reduction in cycle time for loans with exercised property inspection waivers.

And we know value rep and warrant is being offered on about 62% of applications.

Watch for These Two New Market Entries

Based on another year of listening and learning, we’re building on the foundation we laid last year. First, we will introduce single source validation. Single source is the next step in the evolution of data validation. With single source, lenders will be able to validate a borrower’s income, assets, and employment by running a single asset report. 

This solution is now in pilot, so we can test it with live transactions and incorporate feedback. 

We expect to roll it out to all customers in 2018, making sure lenders have the broadest possible choice of vendors.

Single source validation will magnify Day 1 Certainty time and cost savings, and make it even easier to originate loans. Currently, lenders pull multiple reports and work through multiple vendors to validate income, assets, and employment. With single source, they’ll be able to do all this by running one report. 

The report will rely on source data, meaning it will analyze data from the borrower’s bank accounts, including pay stream and direct deposit information. This makes the lenders life easier, as well as the borrowers.

The second improvement being introduced is on a faster track. In early 2018, we will introduce an Application Programing Interface platform. This will provide lenders with a quick and convenient way to plug into our data and technology. Whether you are a large lender or a small lender.

We’re going to start making APIs business-as-usual for lenders. We’ll start by introducing DU Messages API. This will provide lenders with all the information they use from DU to originate a loan. Today, this comes in files that are hard to use. For example, lenders have to rekey the data if they want to use it in their own systems for automated processing. It can also take weeks or months to integrate into our system. With DU Messages API, lenders will be able to customize this information to their needs. For example, they can ask for only the Day 1 Certainty messages. Or lenders can look only at loans from one of their correspondents.

Lenders can also put data to work as soon as it arrives. During the pilot, customers were often able to get integrated into our system within hours.

We’re not stopping with DU Messages API. We’ll introduce other APIs across the entire loan cycle that will make transacting business with Fannie Mae easier and better.

All this is just the beginning. We are committed to continue to deliver innovative tools and services that will move our industry forward.

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