Fannie innovations aim for lower lender costs, more efficient lending

October 21, 2015

WASHINGTON (10/21/15)--A series of innovations announced this week by Fannie Mae are intended to bring more simplicity to lenders and increase access to credit for borrowers. The innovations are designed to reduce lenders’ costs while allowing them to serve consumers more efficiently.

Fannie lenders will be required in mid-2016 to use trended credit data when underwriting single-family borrowers through Desktop Underwriter, Fannie’s automated underwriting program.

Currently, credit reports used in mortgage lending only indicate the outstanding balance and if a borrower has paid on time or is delinquent in existing credit accounts. The trended data, provided by TransUnion and Equifax, will allow lenders to access monthly payment amounts on these accounts over time.

Desktop Underwriter will be updated to utilize this data, and Fannie expects to issue updated guidance to lenders in the coming months.

Other innovations include:

  • Building a new capability through Desktop Underwriter to help lenders more efficiently serve borrowers who do not have a traditional credit history. Currently, lenders must use a manual process to underwrite these loans. Fannie Mae will provide guidance to lenders about this new capability in the coming months and anticipates that the new functionality will be available in 2016.
  • Offering Fannie Mae Connect, a new tool designed to be a one-stop source for users to access data and analytics they need with a single sign-on, replacing multiple legacy systems. Users can customize access and reporting categories, receive e-mail notifications of new reports and provide feedback to Fannie. A beta version is being tested, and the full system with new reports will be available in November.
  • Offering data validation services to allow lenders to validate income through Desktop Underwriter with data provided by Equifax’s The Work Number. Going forward, Fannie will determine if validation services can be offered for additional borrower data such as account statements and additional income documents such as tax returns.