Will Fannie, Freddie’s new tools increase certainty?

by MPA05 Nov 2014
In an effort to increase transparency and expand access to credit, Fannie Mae and Freddie Mac have launched new servicing tools to better help mortgage servicers through the loan process.

Fannie Mae Collateral Underwriter (CU) is a proprietary appraisal analysis application that allows lenders to compare appraisals against Fannie Mae’s database of appraisal and market data. CU, which will be available to lenders in early 2015, provides additional transparency and certainty by giving lenders access to the same appraisal analytics used in Fannie Mae's quality control process.

“Our goal is to provide relief on appraisal representations and warranties in the future, and we will work with FHFA to do so,” said Andrew Bon Salle, an executive vice president of single-family underwriting, pricing, and capital markets at Fannie Mae. “Collateral Underwriter will help lenders build their businesses safely and strongly.”

Click here to learn more about CU.

Freddie Mac has also deployed a new servicing technology tool that allows lenders to electronically submit appeal data and supporting documentation, for foreclosure timeline compensatory fees and late foreclosure sale reporting compensatory fees.

Beginning Jan. 1, 2015, servicers must use the Default Fee Appeal System for all compensatory fee appeals but Freddie is encouraging the group to begin using the appeal system today.  The government-sponsored enterprise said servicers must register by December 2.

Click here to learn more about the Default Fee Appeal System.

Earlier this month, Mel Watt, director of the FHFA, along with U.S. Housing and Urban Development Secretary Julian Castro, pledged to help provide lenders more certainty about when they would face liability for defaults on loans insured by the FHA.

Lenders have argued that standards are so unclear and tight that they fear penalties for minor paperwork errors that have nothing to do with loan quality or repayment. Following the bust, lenders had to repurchase tens of billions of dollars of bad mortgages they sold to Fannie Mae, Freddie Mac and private investors.

 To avoid such costs in the future, lenders have put in place tight mortgage standards that intentionally overshoot Fannie and Freddie requirements. The result has been the tightest credit market Americans have seen in 16 years.

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