Fannie Mae and Freddie Mac’s Uniform Closing Dataset (UCD) requirement deadline of Sept. 25 is mere days away. To recap, this new mandate from the GSEs will benefit lenders by identifying any loan eligibility issues prior to a loan being sold, with the intention of improving loan quality and the accuracy of data. Any loan with a note date on or after the requirement deadline date that is delivered without a submitted UCD file will no longer be accepted.

As well as impacting the salability of loans, non-compliance will be expensive. Understandably, lenders will have concerns about challenges they might face in meeting UCD requirements through their existing loan origination systems. This is unsurprising when you consider that there are more than 700 data points and 1500 enumerations that must be captured, and that most loan origination systems rarely contain all of the required data.

Meeting the UCD requirements can mean manual touchpoints, including data entry and stare-and-compare data validation which is costly, time-consuming and prone to errors. With split disclosures, closing agent modifications, multiple versions from bulk acquisition loan packages, multiple versions and any last-minute changes to closing, few loan origination systems actually contain all the required data. Lenders should not rely solely on their loan origination systems to meet all of their UCD delivery needs.

So what are the available options in order to meet the UCD delivery requirements? Relying on manual processes can mean more staff, increased costs and error-prone results. Leveraging a third-party process automation solution is a better approach. This can accelerate UCD readiness, eliminate costly programming time and effort, and allow lenders to concentrate on their core business.

The right technology approach can accelerate UCD creation, help ensure data accuracy and check for regulatory compliance.

There are solutions available that automatically extract UCD required information from numerous sources including the Closing Disclosures from both lender and seller and then automatically perform data quality and compliance validation prior to creating the UCD. The solution manages the UCD reconciliation, to ensure the data from within the UCD file matches the data on the final closing disclosure forms to be delivered.

During the quality and compliance validation processes, any exceptions are automatically routed to an exception queue for manual intervention by assigned staff. Once all data is validated, the solution will automatically generate the UCD in the required MISMO/UCD format and then package the UCD with the required documentation (such as final Closing Disclosures) as an XML file.

The file is then electronically submitted to the specified GSE. Once the GSE receives the submission, they will provide a response back consisting of both the UCD delivery certificate and a detailed list of information that is automatically routed into work queues that allows the user to see if there are any critical exceptions or any warnings that need to be reviewed. These can then be resolved in a timely manner.

In terms of the benefits of using such a solution, it will ensure the data in UCD XML matches data on the Closing Disclosure. The solution’s OCR technology automatically extracts up to 1700 plus data points from the borrower and seller CDs and then checks accuracy to help ensure accurate UCD data and the most current version of the CD is delivered to the GSE. This helps with early detection to prevent any potential downstream buyback or rejection risk that may occur.

Sending the UCD file electronically to the GSE’s B2B web portals eliminates the need to manually upload it via their user portal. This submission process has been tested and “certified” by both Fannie Mae and Freddie Mac.

Workflow task management is one of the most critical aspects of managing exceptions and eligibility issues that are created. These are automatically routed to user work queues and then prioritized in order to provide an audit trail for issues and enable staff to quickly address them. 

The deadline to achieve UCD compliance is upon us, and it will prove challenging. Reliance on manual data entry and stare-and-compare validation increases risk for the possibility of incomplete data sets, inaccurate data and inaccurate data mapping which will be flagged by GSEs. Custom building an automated UCD solution takes too long and will be costly to implement.

Leveraging a third-party solution that automates UCD preparation and delivery while augmenting existing origination systems will help lenders overcome staff limitations, lower risk, improve compliance and enhance the life-of-loan experience for borrowers.