Business News

Changes to Investor Reporting Bring Fannie Mae Closer to CSP Integration

By Kerry Curry | February 23, 2016

Changes to Investor Reporting Bring Fannie Mae Closer to CSP IntegrationChanges to investor reporting and call-in elimination are underway – just one piece of an overall program Fannie Mae has initiated to make it easier for servicers to do business with the company. 

Beginning in February 2017, Fannie Mae will eliminate the Single-Family call-in requirement for mortgage-backed securities (MBS) in preparation for integration with the Common Securitization Platform (CSP).

This measure will streamline and simplify our monthly reporting processes for servicers and reduce the complexity of Fannie Mae’s internal investor reporting capability.

“The call-in process is a redundant process within our operational capabilities,” says Pat Fulcher, vice president for CSP integration operations at Fannie Mae. “It was established at a time when we didn’t have the capabilities we have today. This is a good time to eliminate the process, simplify our infrastructure and better facilitate our integration with the CSP.”

Aligning with Best Practices

As Fannie Mae prepares to integrate with the CSP, it will align in several key respects with mortgage industry practices and simplify a number of policies and procedures. Today, the Single-Family MBS call-in policy and associated processes are unique to Fannie Mae and require servicers to make monthly reports of pool balances for Single-Family MBS swaps in addition to reporting loan activity data.

Eliminating the Single-Family MBS call-in requirement will simplify policies and procedures and provide many key benefits to both Fannie Mae and servicers.

“When Fannie Mae first established its MBS process many years ago, it required mortgage servicers to report swap security balances, because they had greater insight into the loan-level data necessary to aggregate security balances. Over time, Fannie Mae built out its infrastructure to be able to do for itself what it was asking its servicers to do through the MBS call-in process,” Fulcher says.

Eliminating the MBS call-in requirement, however, isn’t as easy as flipping a switch. Fannie Mae, mortgage servicers and vendors have all built the call-in process into the fabric of their operations.

For that reason, in 2014 when Fannie Mae first contemplated this change, the company engaged mortgage servicers (and will continue that engagement) to understand their challenges and ensure alignment throughout the implementation of this change. “We value the insights and feedback of our servicers and have leveraged much of their feedback to refine the solution,” says Fulcher.

“The servicer feedback process has been facilitated through regularly scheduled conference calls and in-person forums with various subsets of servicers to assess their progress and understand and provide support, when possible, for implementation challenges,” she says. “Servicers have indicated that they have appreciated the long lead time and engagement model, as the change requires significant process and software system adjustments.”

Effects of the Change

Fannie Mae has published the call-in elimination requirements and a step-by-step transition guide detailing how it will implement the changes. Servicers are expected to comply with the elimination requirements when they report mortgage loan activity that occurs on or after Feb. 1, 2017.

With call-in elimination, servicers will no longer be required to submit or reconcile security balances. Fannie Mae will determine security balances by aggregating a servicer’s loan activity reports.

In addition, the reporting cycle will change, aligning the remittance types to the same time period, as well as moving the due date for loan activity reports (LARs) and corrections to an earlier time period.

Servicers will need to adjust to daily liquidations data reporting (not monthly) and to an earlier due date for loan activity reports. Servicers that rely on service bureaus may also need to work with them and software vendors to increase the frequency of loan activity reporting.

“Elimination of the MBS call-in requirement will bring Fannie Mae one step closer to integrating with the CSP and more in alignment with industry practices,” notes Fulcher.

More information is available on Fannie Mae’s website.

Kerry Curry is a freelance writer for several Texas and national publications and is the former executive and magazine editor of HousingWire.