Hey, lenders: Fannie Mae wants to be your ‘partner of choice’

Calling all lenders: Fannie Mae has a message for you.

“Fannie Mae wants to be the partner of choice for lenders,” said Timothy J. Mayopoulos, president and CEO of the government-sponsored enterprise (GSE), in announcing this week a series of initiatives intended to better serve the needs of lenders and help build a more sustainable housing finance system.

Fannie Mae will roll out four programs that it says will bring more certainty and simplicity to lenders, employ stronger data capabilities and help borrowers access sustainable mortgage credit by 2016.

“We are enhancing our offerings, improving our tools and innovating through the technology we provide to our customers. Our goal is to make sustainable homeownership a reality in communities across the country, while reducing risk for taxpayers,” said Mayopoulos.

Fannie Mae

The first initiative aims to offer a more thorough analysis of a borrower’s credit history by requiring lenders to use trended credit data from Equifax and TransUnion when underwriting single-family borrowers through its Desktop Underwriter credit-risk assessment tool.

This data will give lenders access to the monthly payment amounts that a consumer has made on credit card, mortgage or student loan accounts over time, and give lenders a sense of whether the borrower usually pays off revolving credit lines each month, or if the borrower tends to carry a balance from month to month while making minimum payments.

Desktop Underwriter will be updated to automatically pull in this data, and Fannie Mae hopes that lenders will be on board with this change by mid-2016.

“Fannie Mae wants to be the partner of choice for lenders. Our aim is to help lenders serve their customers efficiently so that more qualified borrowers have access to mortgage credit.” – Timothy J. Mayopoulos, Fannie Mae president and CEO

Another enhancement intended to help lenders assess a borrower’s creditworthiness will be a new Desktop Underwriter feature that automates the manual process that lenders currently use to underwrite loans made to borrowers with “nontraditional” credit histories. This feature should be available sometime next year.

Yet another feature to Desktop Underwriter will be a data validation service that pulls in data provided by Equifax’s The Work Number, eliminating the hassle of lenders having to require borrowers to provide copies of pay stubs or other income-verification documents. Fannie Mae hopes this feature will reduce the frequency of mortgage fraud, and is currently considering whether validation services can be offered for other borrower data such as bank statements and other income-verification documents like tax returns.

[Tweet “Fannie Mae’s goal is to transfer a portion of the credit risk ($500 billion in single-family mortgages) by the end of the year.”]

Finally, the GSE will launch a new tool called Fannie Mae Connect, which is a self-service reporting and data analytics portal for Fannie Mae customers and partners.

The tool features a single sign-on and replaces multiple legacy systems, and allows users to customize their access and reporting categories, receive email notifications of new reports and provide feedback to Fannie Mae via an online comment box. A beta version of the tool is being beta-tested, and the full system with new reports will be available in November.

Mayopoulos also said Fannie Mae intends to transition from a credit risk storage company to “a holder and mover of a portion of that risk.” The GSE is currently testing a variety of credit-risk transfer mechanisms, completing a series of transactions with reinsurers and building the first actual-loss transaction under its Connecticut Avenue Securities series.

Fannie Mae’s goal is to transfer a portion of the credit risk ($500 billion in single-family mortgages) by the end of the year.

Email Amy Swinderman.