Freddie Mac is harnessing the power of big data in the new features and capabilities it’s building into Loan Advisor Suite®, the firm’s suite of integrated Web-based tools for originators to leverage in managing the full mortgage lifecycle. Introduced in July 2016, Loan Advisor Suite helps lenders achieve better operational efficiencies, improve loan quality and gain greater certainty regarding repurchase risk.
In April, Freddie Mac began offering collateral representation and warranty relief through Loan Collateral Advisor. In June, the firm released its Automated Collateral Evaluation (ACE), through which the need for an appraisal for certain mortgages submitted through Loan Product Advisor can be waived. New capabilities also coming this year are automated borrower income and asset validation.
“Through our new automated collateral evaluation we’re re-engineering the appraisal process. We’re changing the way lenders originate and speeding up the process by waiving appraisals in certain circumstances,” said Andy Higginbotham, Freddie Mac Senior Vice President of Single-Family Strategic Delivery and Operations, and the mastermind behind Loan Advisor Suite. “Getting a property valuation in a timely manner and at an affordable price has been a real challenge for many lenders. We’re aggressively seeking to change that.”
According to Freddie Mac Single-Family Strategic Delivery and lender feedback, by waiving an appraisal, ACE can shave seven to 20 days off the time it takes for loans to close, which also allows for a shorter rate lock period and can save borrowers thousands of dollars over the life of the loan. ACE can also save borrowers from $300 to $700 or more on the appraisal fee.
“By combining over 40 years of historical data with advanced analytics, we can streamline the valuation process while reducing risk for both lenders and Freddie Mac,” said Higginbotham. “We still expect a significant majority of mortgage loans will continue to require traditional appraisals, but ACE will provide another option for properties that can be valued by leveraging data and models.”
Loan Advisor Suite’s anchor tool is Loan Product Advisor, Freddie Mac’s automated underwriting system, which gives lenders a detailed view of their credit risk and loan quality via a sleek, easy-to-use interface. To take advantage of ACE and the other new capabilities, lenders need to use Loan Product Advisor.
“Right now, there’s a lot of cost and regulation in the process. Lenders want simpler processes, more certainty and confidence in the process, and an improved experience for their customers,” said Higginbotham. “An evolution is taking place and it’s exciting for us to be a part of it through our technology solutions.”