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Perspectives Blog

Using Technology to Strengthen the Housing Market

September 22, 2015

Bruce Lee

When people hear of Fannie Mae, they probably think of mortgages – after all, the company is well known for helping people throughout the country have reliable access to affordable mortgage credit. To do this, Fannie Mae has evolved to become a technology-focused company providing effective, efficient tools to our partners.

We've built a strong and flexible technology organization designed to help the company provide mortgage credit, reduce risk, and work efficiently. When we announced in December 2014 that Fannie Mae would again purchase loans with as little as 3% down payments, our technology organization worked to update our systems quickly so that lenders could begin delivering these loans to us within days. Thousands of families have benefited from this loan option.

More broadly, Fannie Mae's technology tools are used in lender and servicer shops every day to help underwrite loans, check the quality of those loans, and work with struggling borrowers to prevent foreclosure. These tools are run on an interconnected technical infrastructure, protected by our cybersecurity systems and supported by our dedicated application teams.

Fannie Mae's pioneering programs include:

  • Desktop Underwriter® (DU®), developed and continually enhanced by Fannie Mae for over 20 years. DU is a reliable, comprehensive automated underwriting system that helps lenders evaluate mortgage loan applications and determine if a loan meets Fannie Mae’s credit risk standards and eligibility criteria. DU is the leading automated underwriting tool in the industry, helping lenders provide mortgages to millions of Americans with increased certainty and speed, while also lowering costs.
  • Collateral Underwriter (CU) is the latest innovation Fannie Mae has provided to the market and builds on DU’s long history of success. CU helps lenders evaluate the appraisals they receive on loans to make sure that values are appropriate and that information on the property is accurate. This helps reduce risk for both Fannie Mae and lenders, and is a key part of building a stronger housing system for the future. We recently integrated CU with DU to further support our lenders’ risk management and underwriting capabilities.
  • Early Check, Fannie Mae's loan eligibility and data evaluation tool, helps lenders identify potential issues earlier in the process, providing greater certainty of meeting Fannie Mae's requirements. Using EarlyCheck gives lenders the ability to fix issues with a loan before delivering it to Fannie Mae, reducing repurchase risk.
  • Servicing Management Default Underwriter (SMDU) is a loss mitigation platform that helps Fannie Mae's servicers determine what options exist for homeowners who are struggling to make their mortgage payments. SMDU provides real-time evaluation and decisioning to prevent foreclosures through options such as modifications, short sales, or repayment plans.
  • DUS Gateway is a new front-end loan approval system for our multifamily lender partners. DUS Gateway uses cloud-based technology to consolidate multiple manual processes and systems and provide real-time production reporting capabilities. This allows for more efficient and timely collaboration with Fannie Mae's customers and helps us serve the rental housing market more effectively.

Finally, technology is playing a key role as we work to reduce the company's risk profile. In order to build our Connecticut Avenue Securities (CAS) offering, which allows investors to take some of the credit risk that Fannie Mae traditionally held on loans in its book of business, we had to build a new set of tools, platforms, and reporting capabilities. In addition, technologies such as Desktop Underwriter and Collateral Underwriter help to reduce risk on the loans that Fannie Mae acquires. These tools have been instrumental in transferring a portion of the credit risk on nearly $400 billion of mortgages since 2013.

Each of us at Fannie Mae is committed to helping build a safer, stronger, and smarter housing market. Increasingly, we're doing that by melding our deep knowledge of mortgage finance with world-class technology capabilities. Ultimately these technologies benefit borrowers, lenders, and taxpayers.

Bruce Lee
SVP & Chief Information Officer

September 22, 2015