GSEs are again driving industry innovation

Posted on July 19, 2018 in Uncategorized | Add Your Voice

GSEs are again driving industry innovation

Over the past several years, as the industry has evolved from a crisis focus to one focused on growth and competitive differentiation, government-sponsored enterprises (GSEs) have re-established themselves as dominant drivers of technological innovation in housing finance. Freddie Mac’s new automated collateral evaluation (ACE) solution for the Loan Advisor Suite and Fannie Mae’s continued development of its Data Validation Service (DVS) are helping to make the digital mortgage a reality.

“Fannie and Freddie have assumed critical leadership roles in driving innovation in our space,” said Brian O’Reilly, President and Managing Director of The Collingwood Group, a Situs company. “The GSEs are again having a profound influence on the overall direction of the mortgage industry, and Fannie Mae’s efforts with DVS are a great example of them leading the way forward toward fully digital mortgage processes.”

The GSEs have been developing a handful of new end-to-end technology solutions in the hopes of spurring innovation in an industry that is sometimes hesitant to adapt to change. Fannie Mae and Freddie Mac’s current list of projects promises exciting gains for mortgage lenders, including streamlined and safer employment and asset data collection, lower costs, process efficiencies and easier technology integration.

Last year, Freddie Mac rolled out its ACE solution to better leverage data and analytics to assess collateral value, resulting in a faster timeline and lower costs. The solution fits into Freddie Mac’s larger Loan Advisor Suite, which offers a collection of tools and capabilities to drive efficiency in the origination process.

Fannie Mae’s successes with its Desktop Underwriter (DU) DVS are particularly noteworthy. Fannie Mae has taken a thoughtful approach to technology development, focusing on agile engineering, consumer insight-driven design and migration to the cloud. In 2016, Fannie Mae rolled out Day 1 Certainty. The program was originally received with some industry skepticism, but after gaining momentum in recent years, it now dominates tech discussions with lenders.

Fannie Mae has also renewed its reliance on its automated programming interface (API) platform.

“It’s exciting because, through our APIs, our customers can access pieces of our data more quickly,” said Henry Cason, Senior Vice President, Head of Digital Products at Fannie Mae, during a recent interview with DSNews. “It’s now easier for us to integrate into their current technology and manage micro pieces of data from Fannie Mae and inject it into a process point that allows them to make faster decisions.” Greater use of APIs will enhance transparency and improve collaboration among the GSEs, lenders and vendors.

“These innovations will deliver value over time — particularly as lenders increasingly seek to significantly compress the current 60-day-plus timeline from application to delivery and as borrowers come to expect that a mortgage loan application will be processed more instantaneously — like a credit card application,” said O’Reilly.

Fannie Mae names former Barclays CEO and Digital Banking Technology Expert Antony Jenkins to the Board of Directors 

Fannie Mae this week announced that Antony Jenkins has been elected to the Board of Directors. Mr. Jenkins served as Group Chief Executive Officer and as a member of the Board of Directors at Barclays PLC, one of the world’s largest banks, and is a digital banking technology executive with extensive fintech expertise. He joins a dynamic, broadly experienced Fannie Mae Board that will help guide the company as it fulfills its mission to provide access to safe, affordable mortgage financing in the United States. He has been appointed to the Strategic Initiatives and Technology Committee and the Nominating and Corporate Governance Committee.

“We are very pleased to welcome Antony to the Fannie Mae Board of Directors,” said Egbert L.J. Perry, Chairman of the Board. “With his leadership of one of the world’s largest banks and his experience founding an important digital technology firm, he has a keen ability to identify and develop emerging technology opportunities and to bring valuable and practical insights to Fannie Mae.”

“Antony is a highly respected and knowledgeable business leader. He is a great addition to our Board of Directors at a time of exciting innovation and technological opportunity in housing,” said Timothy J. Mayopoulos, President and Chief Executive Officer.

Read more: Fannie Mae

Housing market stumbles at the beginning of summer

Nationwide home building declined sharply in June, a possible sign that construction labor shortages and rising material costs are causing more damage to the housing market than many analysts initially believed.

Housing starts declined 12.3% in June from the prior month to a seasonally adjusted annual rate of 1.173 million, the Commerce Department said Wednesday. This was the largest monthly percent drop in about a year and a half, driven by construction declines in all regions of the U.S. for almost all types of housing.

Government housing-starts data are exceptionally volatile. Still, the reported decline for June was much bigger than the 2.2% decline analysts expected.

Meanwhile, residential building permits, which can signal how much construction is in the pipeline, fell 2.2% from May to an annual pace of 1.273 million last month, which was a surprise, as economists had been expecting a 2.2% gain for permits in June.

Read more: Wall Street Journal

FHFA leadership structure is unconstitutional: Judges

A federal appeals court in Texas has ruled that the single-director structure of the Federal Housing Finance Agency is unconstitutional but validated a dividend agreement requiring the government-sponsored enterprises to deliver nearly all of their profit to the Treasury Department.

The U.S. Court of Appeals for the Fifth Circuit in Texas reversed the previous court’s decision and agreed with the shareholders that the FHFA was “unconstitutionally insulated from executive control” since its single director – as opposed to a board or commission – cannot be fired by a sitting president without cause. If upheld, the decision could render the agency’s actions void.

Read more: American Banker

The top 5 best cities for first-time homebuyers

Buying a home for the first time is an exciting and important milestone for many Americans. Their purchases make up a sizable chunk of the market, too. In 2017, 38% of all U.S. single-family home purchases were made by first-time buyers.

The search for a first home requires careful consideration of a number of factors. Buyers must balance what they want and need with to what they can afford. Often, people begin searching for their dream homes without a realistic idea of market prices, interest rates or even their eligibility to get a mortgage. Potential buyers may want to narrow their search down to an area with a good reputation before getting into housing details.

To simplify the process, WalletHub compared 300 cities of varying sizes across 27 key indicators of market attractiveness, affordability and quality of life. These are the top 5 best cities for first-time homebuyers:

  1. Broken Arrow, OK
  2. Tampa, FL
  3. Centennial, CO
  4. Boise, ID
  5. Grand Rapids, MI

Read more: WalletHub

Ginnie Mae’s MBS balance continues to climb

A recent press release from Ginnie Mae says the organization’s total outstanding principal balance related to its mortgage-backed securities (MBS) has inched up to $1.971 trillion in June 2018, an $11 billion increase since the May 2018 reporting.

Ginnie Mae is a wholly-owned government corporation that attracts global capital into the housing finance system to support homeownership for veterans and millions of homeowners throughout the country. Ginnie’s report reveals that MBS issuance thus far for Fiscal Year 2018 (FY 2018) totaled $323.337 billion, to the end of May. The $1.971 trillion total outstanding principal balance as of the end of June was up from $1.842 trillion in June 2017.

Ginnie’s MBS issuance for June 2018 totaled $37 billion, including $35.330 billion of Ginnie Mae II MBS and $1.669 billion of Ginnie Mae I MBS. This also included $1.024 billion of loans for multifamily housing. That overall total is up slightly from May’s total of $35 billion, which included $33.431 billion of Ginnie Mae II MBS and $1.890 billion of Ginnie Mae I MBS.

Read more: DSNews

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