FREDDIE MAC'S NEW SELLING SYSTEM CAN NOW HANDLE ALL CASH SELLING NEEDS

McLean, VA – Freddie Mac's new web-based selling system, which allows lenders to price, commit and fund mortgages for cash on a single platform, added new capabilities this year to make it easier and faster for lenders to sell mortgages to the company. Lenders now can use the selling system to sell to Freddie Mac best efforts and mandatory cash contracts for both servicing-retained and servicing-released mortgages. In addition, a pilot for the Guarantor Swap program will begin this summer using the new selling system.

Lee Farkas, chairman of Taylor, Bean & Whitaker in Ocala, Florida, praised the new selling system. "The speed with which funding is received, the ease of use, seamless integration with our system and our ability to export data, is like going from a Model T to a Porsche Carrera," Farkas said. "One of the challenges we face as a non-bank owned mortgage banker is liquidity. The system helps us get loans off our warehouse lines quicker and funding back to us sooner."

Ed Albrigo, vice president of Change Management at Freddie Mac, said, "This is part of a larger, multi-year effort at Freddie Mac to reengineer our business systems and to make it easier to do business with us. We are integrating all selling functions from pricing through delivery, certification and servicing, onto one web-based platform, creating an end-to-end system. We've eliminated the need to interact with multiple systems or to complete tasks through fax and phone. That makes the business of selling loans to Freddie Mac faster and easier for our customers."

Albrigo added, "These steps will ultimately lead us to the point when mortgage loan data will be entered at origination and flow all the way through to purchase and servicing set-up. Our focus right now is on expanding the selling system to include Guarantor, and then our next step will be adding servicing capabilities."

The selling system currently enables lenders to sell loans to Freddie Mac for cash 24 hours a day, from anywhere they have an Internet connection, and get next day funding, if needed. Under the old system, lenders needed a dedicated computer with special software to sell loans to Freddie Mac, or they telephoned the Freddie Mac cash desk.

Today more than 1,000 lenders are using the selling system to sell mortgages to the company for cash, compared with 100 when it was first used for servicing-retained mortgages in April 2002. Currently, 80 to 90 percent of Freddie Mac’s cash mortgage purchases come through the new system.

"We are continually talking to customers about the system and making adjustments based on their feedback," said Ed Albrigo. "We want this system to reflect how sellers want to do business with Freddie Mac."

Park National Bank in Newark, Ohio, one of the lenders that participated in the selling system pilot, has been using the new system for more than two years. "Freddie Mac's web-based selling system is very easy to follow," said Ed Lewis, vice president of Park National Bank in Newark, Ohio. "Freddie Mac has continually asked for our input, listened and then developed features that would be helpful to us. We couldn’t have handled the refinance volume without it."

Coming Soon

Freddie Mac will launch a pilot this summer with several lenders who sell loans through its Guarantor Swap program. Broad availability is expected by end of year, based on results of the pilot. The Guarantor program is another way lenders can sell loans to Freddie Mac. Guarantor is used when lenders swap their loans for Freddie Mac mortgage-backed securities, called Participation Certificates (PCs). When Guarantor is added to the new selling system, lenders will be able to receive their PCs in three days instead of the current five days it takes using the old system.

In the next twelve months, Freddie Mac also will integrate into the new selling system some of the loan application data that a lender enters into Freddie Mac’s Loan Prospector^® automated underwriting system. For the lender, this will create a more streamlined process that eliminates rekeying information into separate systems and decreases data input errors.

Freddie Mac is a stockholder-owned corporation established by Congress in 1970 to support homeownership and rental housing. Freddie Mac purchases single-family and multifamily residential mortgages and mortgage-related securities, which it finances primarily by issuing mortgage passthrough securities and debt instruments in the capital markets. Over the years, Freddie Mac has opened the doors for one in six homebuyers and more than two million renters across America.

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