Freddie Mac recently announced Loan Closing AdvisorSM, Loan Product AdvisorSM and Business Intelligence – new tools and functionality scheduled to go live this summer with Loan Advisor Suite. Loan Advisor Suite is Freddie Mac's smart, end-to-end technology solution designed with lenders to help lenders deliver high-quality loans and acquire earlier insight into representation and warranty relief during the loan production process. Freddie Mac SVPs Andy Higginbotham and Christina Boyle discuss the impact on lenders.
Freddie Mac is rolling out Loan Advisor Suite this summer. What makes Loan Advisor Suite different?
Higginbotham: Since the 2008 housing crisis, the cost of originating a loan has more than doubled. The Mortgage Bankers Association reports origination costs rose from an average of $3,685 per loan in 2009 to $7,747 by the end of 2015.
They also report costs rose $667 in the last quarter alone. Reasons for the cost increases include new regulatory compliance requirements and the addition of numerous manual checklist processes to avoid future repurchase risk. That's why we are focused on giving our customers a better way to maximize their operational efficiency and their opportunities for representation and warranty relief.
Boyle: But instead of rushing something into the marketplace, we took our time and partnered with our lenders. It turned out that their objectives were our objectives: greater certainty, usability, reliability, and efficiency. We used thousands of their suggestions so Loan Advisor Suite would meet or exceed the demands of the people who are personally responsible for manufacturing high-quality loans.
Lenders will immediately see the difference in the way Loan Advisor Suite looks and feels. The screens are clean and uncluttered. The tool icons are intuitive and logically organized. Lenders can access all of Freddie Mac's loan production applications and all of their loan data through a single sign-on portal and/or their loan origination system. Lenders simply leverage the right tool as different sets of data arrive at the appropriate points in the origination process.
What makes your latest announcement important?
Higginbotham: We are rolling out several game-changing solutions to our current roster of lender tools and applications: the previously announced Loan Collateral AdvisorSM, Loan Product Advisor, Loan Closing Advisor, and Business Intelligence. In addition to offering the new tools, we are greatly enhancing Loan Quality Advisor, Loan Coverage Advisor and our Selling System. All of our new and enhanced solutions will be available in a single sign-on Loan Advisor Suite Portal.
What Is Loan Product Advisor?
Boyle: Loan Product Advisor is the next generation of Loan Prospector and the cornerstone of the Suite. Lenders, for example, will see major changes in the feedback certificate. Like the Loan Advisor Suite, the new certificate is clean, simple and easy to understand. Based on our core principle of usability, the underwriting messages returned by Loan Product Advisor are actionable and loan specific, just as they are for Loan Collateral Advisor. They show at a glance everything you need to know about a loan, including insight into representation and warranty relief earlier in the process. We are also planning even more important new functionality for the Loan Product Advisor later this year.
What do Loan Closing Advisor and Loan Advisor Suite's other new tools do?
Higginbotham: Loan Closing Advisor evaluates each loan's closing data for alignment with the Uniform Closing Dataset (UCD). The feedback Loan Closing Advisor provides will enable lenders to resolve data defects before the loan closes, offering them greater certainty of avoiding repurchase risk. Customers and vendors who ran loan files through Loan Closing Advisor on a test basis identified UCD issues that needed resolution to support the Consumer Financial Protection Bureau's TILA-RESPA Integrated Disclosure (TRID) rule. So Loan Closing Advisor is already proving to be an invaluable new tool.
Also going live this summer as part of Loan Advisor Suite is Loan Collateral Advisor, which uses a proprietary model to provide earlier insight into eligibility for earlier collateral representation and warranty relief. Loan Advisor Suite ranks the likely accuracy of the appraiser's market value by using data submitted to the Uniform Collateral Data Portal®, and gives real-time feedback and guidance for identifying and resolving appraisal issues.
Boyle: Perhaps the most innovative new capability is Business Intelligence. After signing on to Loan Advisor Suite, lenders can use Business Intelligence to monitor their transaction data, at the loan or summary level, for one tool or the entire Suite. All the data from the different tools a lender uses is pulled into a simple snapshot designed to make pipeline reporting, peer comparisons, and trend analysis easier.
Loan Advisor Suite brings all of its different pieces together in a revolutionary way. One portal. One sign-on for instant access to all of Freddie Mac's loan production tools and all of your loan data. Designed with lenders to give lenders greater certainty, usability, reliability, and efficiency. And we're working to make it better, product by product. I can't wait to talk to our customers about it.
For more information on Loan Advisor Suite, contact your Freddie Mac representative or call 1-800-FREDDIE.
Loan Advisor Suite's integrated tools address loan defects as they occur in the manufacturing process.
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