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Technology Transforming the Secondary Market

SVP and Chief Information Officer Robert Lux It only took Freddie Mac 17 business days to write, test, and deploy the 100+ rule changes comprising our Hurricane Sandy disaster relief policies for the systems lenders use to sell and service Freddie Mac mortgages. That is about 90 percent less time than it took to operationalize policy changes following disasters like Hurricane Katrina or the 2012 New England floods.

The upshot?  Faster turnaround times at Freddie Mac equate to more quickly providing relief to borrowers whose homes were damaged by last year's super storm.  This also enabled originators to maintain pricing and fund mortgages for homebuyers and refinancing borrowers whose closings were abruptly put on hold by Hurricane Sandy.

Altogether, within seven weeks of the storm, Freddie Mac was able to fund nearly 14,000 loans, providing direct and measurable relief to families impacted by the disaster.

Recent Freddie Mac system improvements were also a major reason why the nation's mortgage markets were functioning at the height of last year's storm.  As blackouts and system failures rolled over Wall Street and the surrounding region, Freddie Mac's trading desks were fully operational – buying and trading mortgages and securities – thanks to two years of upgrades to our business continuity systems and disaster recovery capabilities.  These improvements will help us keep the mortgage market stable should a major event occur in the Washington, DC area where Freddie Mac is based.

All of these examples underscore how information technology initiatives underway since the housing crisis began have been transforming and strengthening Freddie Mac and the mortgage industry.  In the last two years alone, Freddie Mac has increased its computing power by 56 percent and its storage capacity by 50 percent.  At the same time, we have reduced costs.  For example, we have reduced our average technology spend per-employee by 15 percent, while providing our employees with better computing solutions.

The net result is a more stable technology infrastructure that is delivering greater value and quality to our customers today while simultaneously preparing Freddie Mac and the industry for the technology demands of a mortgage finance system in transition.

For example, last year we decided to implement a business rules management system at the same time we were implementing the Uniform Loan Delivery Dataset standards (ULDD) mandated by our regulator, the Federal Housing Finance Agency.

The business rules system essentially enables our business people to create rules rather than have to engage IT for systems changes.  This has reduced the time needed to translate complex business decisions into computer code.

Since its implementation in April 2012, the system that supports ULDD has significantly streamlined our process for implementing new federal mandates and policies governing data quality, credit quality, and other essential business operations. This in turn gives business professionals more time to work with our customers and respond to an evolving marketplace. This system proved its value dramatically by enabling us to surpass previous disaster response times when Hurricane Sandy hit.

Looking forward, we will continue to transform Freddie Mac and the secondary market by optimizing our technology to support the needs of America's lenders and their ultimate customers – Americans who wish to own or rent a home.  Our goal is to drive towards an increasingly efficient secondary mortgage market that is more flexible, reliable, and ready to support our customers and America's borrowers in any economic climate.


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