Dave Lowman on Reimagining the Mortgage ExperienceSM
September 7, 2017
Dave Lowman, Freddie Mac's executive vice president, Single-Family Business, has been a leader in the mortgage industry for more than 30 years. "I love this industry, and I'm passionate about it," he says. Here, Dave talks about how Freddie Mac is reimagining the mortgage experience and the new ways we're making homeownership possible for millions of Americans.
1. What trends are shaping the mortgage industry today?
Right now, we're seeing low homeownership rates and a shortage of housing inventory. Lack of investment in new construction is impacting affordability overall. Eventually, rates will go back up – and that will lead to ARM share increases and more affordability challenges. We're also seeing a move to a purchase market, and it's putting pressure on originators to find ways to bring in new business.
At the same time, there's a drive within the industry to make the mortgage origination process easier and more efficient, from point-of-sale to securitization. At Freddie Mac, we're doing our part, working with our industry partners to reimagine the mortgage experience. We want to create a simpler, faster, and less costly path for our lenders, and ultimately for consumers.
2. How is Freddie Mac reimagining the mortgage experience?
Our experts are harnessing the power of big data and advanced analytics to help address the challenges of today's markets and drive the future of how the industry grows and operates.
One example is our Loan Advisor Suite® of online tools. To help us build the Suite, we've combined over 40 years of historical data with all the data you've provided us through the Uniform Mortgage Data Program, and we've solicited feedback from lenders about their processes. The tools in Loan Advisor Suite assess credit, capacity, and collateral to help validate the quality of the loans our lenders originate.
The Suite provides automation and transparency into the loan production process, and provides greater confidence when you make loans to homebuyers, whose qualifications can range from one side of the credit box to the other. Basically, the Suite enables you to originate more loans more quickly, at a lower cost and with even more certainty about their quality.
As an example of lowering costs, the new automated collateral evaluation (ACE) provides an automated alternative to an appraisal. ACE leverages data and analytics to provide you with immediate collateral representation and warranty relief. That reduces the time it takes to get to closing, which saves money for you and your borrowers.
3. How is digitization making an impact on the industry?
Digitization is undeniably a key driver in the evolution of the mortgage process, pushed in large part by evolving regulatory requirements.
Additionally, more and more borrowers are demanding it. For example, Millennials live and work through technology. They want a low-effort – or even effortless – and satisfying experience that fits with their expectations. The bottom line is we must understand current and future borrower needs to deliver the end-to-end experience they do, and will, expect.
If you aren't already, I recommend you take advantage of the efficiencies electronic loan documents and eMortgages bring to the digital mortgage process. You don't have to go fully electronic all at once; you can start with a hybrid approach and work to meaningfully integrate digitization into your processes over time. We can help you adapt.
4. How is Freddie Mac helping lenders reach more borrowers?
Ensuring affordability and access to credit has long been a priority for Freddie Mac. It's part of our mission and the unique role we play in the industry.
We're reaching more borrowers through products that meet today's needs. For example, our 3% down products, Home Possible® and Home Possible AdvantageSM, are geared to low- to moderate-income homebuyers with limited down payment savings and buyers in high-cost or underserved communities.
We're committed to providing effective, responsible, and sustainable solutions to help make homeownership accessible. As another example, we recently expanded homeownership opportunities for borrowers with no credit score.
5. Who are tomorrow's borrowers?
I've mentioned Millennials, who are the young face of the future borrower. At the same time, many Baby Boomers are downsizing, which has created yet another market. African-Americans are an emergent demographic, many of which are ‘boomerang borrowers' returning to the market after the housing crash. Hispanics will make up more than half of all households formed in the next ten or more years.
They're all groups to watch, and we need to better understand and anticipate their needs if we're going to help them play a sustained role in the housing market. To stay relevant now and into the future, the industry must know what drives them – and more importantly, what we all need to do to effectively reach, influence, and serve them.
6. Any parting thoughts?
I'm personally committed to working with our customers to find solutions to help them reach potential borrowers in today's – and tomorrow's – market. The dynamics are changing, and your execution needs may change as well.
But in an evolving industry, change on your end doesn't have to be big. Everything doesn't have to change at once, and you don't have to go it alone.
The best ideas arise when we work together on how things are done today – and reimagine them for the future. We're focused on the overall customer experience we provide because a great experience helps you better serve your customers.
We want to hear from you so we can do better business together. If you have questions or ideas, reach out to your Freddie Mac representative or call our Customer Contact Support Center (800-FREDDIE).