How Freddie Mac's innovative API technology is delivering innovative personalization to the mortgage industry
In recent years, tech has played a starring role in revolutionizing the mortgage industry, making the lending experience faster and more efficient for borrowers and brokers alike.
Freddie Mac, the Virginia-based Government Sponsored Enterprise (GSE), has spearheaded much of the change, introducing many tech-based solutions and facilitating remote electronic closings.
In addition, its innovative application programming interface (API) solutions, that enable the flow of information without heavy integrations, came to the rescue during the COVID pandemic; and with a raft of new products in the pipeline, they are set to further transform the mortgage process.
One person breaking down barriers to better enable a true digital mortgage experience is Michael Conlon. With more than 10 years’ experience in the mortgage industry, spanning operations, analytics and product development, he is a senior tech lead at Freddie Mac’s strategic delivery division, tasked with designing and driving the company’s API products.
MPA caught up with him during his busy schedule to discuss Freddie Mac’s API strategy as well as some of the GSE’s exciting developments due to be rolled out in the coming months.
How does Freddie Mac view API strategy within mortgage lending?
Our API strategy is focused on creating services that streamline processes and promote easy access to data and insights available to our customers where and when they need it.
We want to create a better digital mortgage experience by enhancing our clients’ technology through automated services. This can lead to lower origination costs, reduced closing cycle times, and a better borrower experience.
Freddie Mac tools promote a more efficient underwriting process which enables lender clients to offer a more compelling product to prospective borrowers. Freddie Mac APIs are simple, easy integrations, and they fit flexibly within our lender processes.
How important has API development and usage been in terms of workflow and customer experience?
Prioritizing API development has had a strong, positive impact on optimizing our clients’ workflow to deliver a superior experience for both lenders and borrowers. APIs allow Freddie Mac to react quickly to customer needs by providing automated solutions with simple, easy integrations and minimal development costs.
The Freddie Mac Loan Look Up API is a great example of how we reacted quickly at the start of the COVID pandemic to support a rapidly changing underwriting environment. We built Loan Look Up to help lenders easily identify Freddie-owned loans that could be eligible for alternative appraisal requirements at a time when everyone was nervous about having appraisers in a home.
The API was designed, developed and deployed in about three weeks, and lenders were able to operationalize the service in as little as one day. It’s a lightweight integration that efficiently addressed a major challenge. Loan Look Up was our first broadly available API, and it is a great example of how our strategy provides tangible benefits to lenders and borrowers.
Can you give us some specific examples of APIs currently under development?
We’re focused on providing a simpler, faster and more cost-effective mortgage-buying experience. We have three products in our API Portfolio that immediately come to mind. First our Property Insights API will allow lenders to search our appraisal database and pull back historical property data, such as property type and appraisal form, using only the subject property address. Using this service, lenders can more efficiently identify property-related pain points and kick-off collateral underwriting steps earlier in the origination process to minimize underwriting delays and close loans more quickly.
Next, we’re rolling out the Loan Advisor Data Share API which is a data and document sharing tool focused on supporting correspondent lenders and the third-party origination market. This API eliminates manual steps and empowers our sellers to retrieve correspondent-originated loan data proactively. Lenders can quickly and easily incorporate data into their pre-purchase review processes to impove loan quality and fungibility to Freddie Mac.
Lastly, we’re putting the finishing touches on our Current Mortgage Snapshot API. This API uses limited loan application data, including monthly P&I, term and note rate, to match and return loan term and payment information on mortgages currently owned by Freddie Mac. Used during underwriting and in conjunction with Loan Product Advisor® (LPASM), it’s designed to support a variety of use cases, but our initial focus is on providing supplemental data to support net tangible benefit calculations on refinances.
These highlighted services are just a few examples of products available within the Freddie Mac API portfolio, and we are investing in APIs across the loan lifecycle from point-of-sale through servicing and loss mitigation.
There’s often talk in the mortgage industry about the lack of standardization when it comes to automated solutions and platforms and that it’s one of the biggest challenges many lenders still need to address. What is your view on this, given the role APIs play in helping different systems to communicate with each other?
You can certainly make that argument when looking at the industry over time. But one of the great things about APIs is they allow for more standardization and consistency when integrating platforms and systems. API consumers can integrate with an API on the front-end and Freddie Mac can make updates behind the scenes with little or no impact to the API consumer. Our services are designed using RESTful architectural principles to promote design flexibility, scalability, and ease-of-integration. We also emphasize adherence to MISMO data standards to promote consistency in data and structure across services.
I also want to highlight the Freddie Mac Developer Portal. It’s a centralized hub that provides integration documentation, testing support, and more for each of our APIs in a standard format. We strive to create a consistent experience across products to provide a superior user experience.