Optimize Your Origination Process with - The Servion Group€¦ · Optimize Your Origination...

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Optimize Your Origination Process with

© 2018 Fannie Mae. Trademarks of Fannie Mae. 1

September 2018

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Operational Efficiency

BetterBorrower

ExperienceCertainty

Universal Goals of our Customers

• New / enhanced point of sale technology

• “Consumer grade” borrower experience

• Lower costs and increased operational efficiency across all channels

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Creating a superior borrower experience, driving operational efficiency resulting in reduced origination cycle times and providing freedom from reps & warrants

DU® Validation ServiceFreedom from paper-based processes with validation of income, assets, and employment through third-party data vendors

Property Inspection W aiverFreedom from appraisal requirements on eligible transactions

Certainty on Appraised ValueFreedom from reps & warrants on appraised value with the power of Collateral Underwriter®

(CU®) when the CU risk score is 2.5 or lower

Optimize Your Origination Process with Day 1 Certainty®

© 2018 Fannie Mae. Trademarks of Fannie Mae. 4August 2018

Key benefits to keep in mind:• Reduction in cycle time • Reduction in loan origination costs• Competitive advantage• Digital is safer than paper or email• Reduction in documentation• Reduction in the “back and forth” with Processor or Underwriter• Close the loan faster• Compete with cash offers• No waiting for the appraisal• Less cost to Borrower (with a PIW)• Potential for shorter rate locks• Expedited underwriting, QA/QC process• Increased fraud protection• Enhanced borrower experience• Representations and warranty relief

Optimize Your Origination Process with Day 1 Certainty®

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YESIncome Validated

NOIncome Not Validated

How Does DU Evaluate Income?

DU calculates income

DU calculated amount>=

amount provided by lender on the online

loan application?

DU obtains copy of the third party

vendor report

Can resubmit with lower income amount© 2 0 1 8 F a n n ie M a e . T r a d e m a r k s o f F a n n ie M a e .

1% delta perm itted

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Employer matches online application?

YESEmployment Validated

(close in 10 days)

NOEmployment Not Validated

DU obtains copy of third party vendor employment report

???

How Does DU Evaluate Employment?

Age of data requirement met?Active employment?

Can resubmit with refreshed VOE© 2 0 1 8 F a n n ie M a e . T r a d e m a r k s o f F a n n ie M a e .

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How Does DU Evaluate Assets?

YESAssets are Validated

DU assesses assets based on

information from the vendor report

DU calculated amount > DU “Total Funds to

be Verified”

DU obtains copy of vendor report

NOAssets are Not

ValidatedDU Considers:

1. Checking, savings, CD, money marketIf aggregate amount < “Total Funds to be Verified”:

2. Stocks, mutual fund accounts, retirement accounts DU Messages

© 2 0 1 8 F a n n ie M a e . T r a d e m a r k s o f F a n n ie M a e .

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Day 1 Certainty Metrics

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Day 1 Certainty – Borrower Interest

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Day 1 Certainty Metrics

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Day 1 Certainty – Key Observations

• Day 1 Certainty (D1C) is more of a business process change than a technical change. Lenders will not see cycle time reduction if DU Validation Services are just added to their existing business process.

• DU Validation Services should be executed by the Loan Officer (early in the process) to obtain full benefits of D1C.

• Staff should refrain from accepting paper documentation related to employment, income and assets when possible. Documents received from the borrower become part of the loan file and create unnecessary reconciliation issues for staff (e.g. underwriter).

• Operations staff don’t always realize that deviating from the manual VOI/VOE process will negate rep and warrant relief.

• It is important to have D1C borrower eConsent functionality.

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Day 1 Certainty - Key Observations• Most staff don’t fully understand the full benefits of Day1 Certainty

• Loan Officers – enhanced borrower experience, faster close equals commissions quicker, compete with cash offers.

• Processor – third party vendor verification of VOI/VOE & Assets allows Processors to focus on other loans/work.

• Underwriter – streamlined underwriting process. Creates staff efficiencies by allowing more senior underwriters to focus on more complex loans.

• QA - Streamlined QA process for D1C components/loans.• Post Close QC – takes less time to review. Many lenders negotiate

reduced pricing for D1C loans.

• VOA is easily the toughest component to implement. Educating the borrower on how easy, safe and secure the process is can dramatically improve borrower participation.

• Loan Officers can be hesitant to offer the VOA in fear of borrower’s financial account security concerns. It is important to reiterate that third party VOA vendors utilize the login security of the borrower’s financial institutions.

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Day 1 Certainty Asset Validation

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Day 1 Certainty Asset Validation

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Common D1C Questions Lenders Receive from Borrowers