Congratulations! You’re Approved with Fannie Mae But Now What?
By Tanya Rutledge | January 12, 2016
Fannie Mae, eager to diversify its lender base, has a team of specialists to help new customers understand its requirements and learn to use its technology and processes, or help previous customers get reinstated.
Those requirements involve documenting the lender’s origination and loan quality control processes top-to-bottom to ensure quality and integrity. When the upper management at Mount Vernon, IL-based Peoples National Bank NA decided to embark on the process to become a Fannie Mae-approved lender, vice president and head of loan operations Laura Bailey knew she would have her work cut out for her. “The main thing we had to do was ramp up our quality-control program, and there was no second-guessing it,” she says. “We just charged forward.”
To get into compliance with Fannie Mae’s requirements, Peoples National Bank had to leave the vendor that had been handling quality-control assessments for loans, a move which Bailey said the organization had been contemplating anyway. To switch vendors, the bank, which has 22 branches and about $1 billion in assets, had to get all of its reports up-to-date and become stricter in its requirements for receiving timely assessment reports from the new vendor.
“It took some time, but it was going to be better in the long-run,” Bailey said of the quality-control overhaul. ”We knew we needed to do it, and the process with Fannie Mae sort of lit a fire under us.”
Once Peoples National Bank shored up its quality-control program, the bank was ready to enter the application process to become an approved lender – a status which would allow selling loans to Fannie Mae and servicing the loans.
Once a lender receives approval to sell loans to Fannie Mae, that lender is turned over to a highly trained account team that helps them get set up to sell and service loans.
Bill Cragg, a customer sales support manager - Customer Engagement worked with Peoples National’s staff to smooth delivery of their first loans. Cragg said many lenders are surprised that Fannie Mae’s approval and onboarding process is so streamlined and that Fannie Mae is there for them every step of the way to help guide and support lenders from the time they first signal interest in doing business with Fannie Mae to enabling their first deliveries.
Cragg said the most difficult part of the process can be gathering up all the required documentation, which can take some time. But once that is completed, lenders are taken through a hands-on training process using online meeting system WebEx, which Cragg said enables the lenders to click through different screens to import loan data and then simulate a loan presentation.
“We have found that the quickest way to get a lender to deliver a loan to Fannie Mae is to offer them personalized one-on-one training,” Cragg says. “During the training, we let them do the driving.”
For Roberta Fizell, vice president of mortgage operations for Chaska, MN-based KleinBank, the training process was key to getting KleinBank back up-and-running as a Fannie Mae lender. The bank had been an approved Fannie Mae lender in the past, but had been inactive for the past decade.
Although Fizell was at the bank during that time, the rest of her staff was not. And a lot had changed in terms of technology and other requirements.
Fizell said that KleinBank had recently acquired a community bank with a small Fannie Mae portfolio, which prompted the bank to seek approved-lender status once again.
“We had to apply to become a servicer in order to keep that portfolio, so it made total sense for us to look at going directly to Fannie Mae,” she says. “For us, it was mainly about pulling the information together and understanding the newer Fannie Mae requirements.”
Like with Peoples National Bank, the biggest piece of the approval puzzle for KleinBank was adopting stricter quality-control requirements.
Fizell said she was pleasantly surprised with Fannie Mae’s training program for newly approved lenders, especially given that most of her staff was new to the process.
After getting approved as a Fannie Mae lender in June, KleinBank delivered its first loan to Fannie Mae in September, and has since delivered another one.
The bank, which has about $2 billion in assets, hopes to deliver about $5 million in loans to Fannie Mae in the first year, and then to grow the portfolio from there.
Cragg said lenders have a strong support system within Fannie Mae to help them with any issues that might arise, not just in the beginning, but at any time down the road.
Fannie Mae currently has a stable of about 1,600 active lenders that regularly do business with the organization. “What we want them to understand once they are through the approval process is that they can call us at any time, and we will always have answers for them,” Cragg says. “Having that support during and after the approval process is critical.”
Tanya Rutledge is a freelance writer based in Dallas who specializes in real estate and finance topics. She has been covering business news for outlets in Texas and California since the mid-1990s.