Data Standardization Plays a Key Role in the Housing Finance System
With the full adoption of the Uniform Loan Delivery Dataset (ULDD) today, Freddie Mac reaches a critical milestone of the Uniform Mortgage Data Program (UMDP) – the joint-GSE initiative to improve loan quality through consistent and standardized data. With the ULDD and the Uniform Appraisal Dataset (UAD) now in use, lenders nationwide are using a "common language" for the loans and appraisals they deliver to Freddie Mac and Fannie Mae. This is the culmination of several years of hard work, investment, and planning across the industry that we could not have accomplished without the collaboration and partnership of our customers, vendors, and appraisers.
Standardizing data across the entire loan manufacturing process through the UMDP has far-reaching benefits. At Freddie Mac, we are already seeing improved data quality and enhanced risk management capabilities. The UAD has enabled appraisers to provide consistent descriptions of the subject and comparable properties, resulting in far greater clarity in appraisal reports. This, in turn, gives lenders greater confidence in the appraisal data they receive, regardless of where the property is located or who is doing the appraisal. Ultimately, this will help lenders and investors reduce collateral-related risks because it's now possible to evaluate the appraisals against standards and property trends.
We will continue to work with our regulator, the Federal Housing Finance Agency, on these efforts. We have already begun working on the next phase of the ULDD, which will support expanded loan-level disclosure for our mortgage-backed securities. We're also going to bring the benefits of data standardization to servicing, which will be based on MISMO like our other UMDP efforts. The company has long been a champion of these industry-wide standards, and has actively participated and held leadership positions in MISMO since its debut more than ten years ago.
Like it does on the loan delivery side, standardized servicing data will result in greater consistency in the data collection process, which means improved quality, transparency, and risk management. In the long run, it will increase efficiency across the industry by using a common dataset to communicate among all stakeholders, and improve borrower care throughout the process.
We have begun analyzing servicing datasets, and will be working toward establishing and communicating the first phase of the dataset this winter. We know that this will require significant time and investment from our servicers, so we plan to work closely with them and our vendors during the development of the specifications to ensure that data collection phases are feasible. Freddie Mac will continue to look for opportunities to convey the benefits of data standardization to the industry and borrowers nationwide.
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