I joined Freddie Mac one year ago this month, after about 20 years working for different lenders. I was excited by the many opportunities Freddie Mac presented, such as the opportunity to work with the incredibly smart and talented people at the company. I was attracted to move from having a deep impact at one company to a broad impact across housing finance. And I was particularly enthusiastic to help ensure Freddie Mac’s work is embraced by the industry we work alongside every day; an industry on the front lines of helping Make Home Possible for so many in this nation.

From my experience in sales, operations, strategy and analytics, I brought with me an understanding and appreciation of many facets of the mortgage process, from the loan officer taking the application and the underwriters assessing the borrower to the capital markets dealing with the best execution. I hoped that perspective could help ensure Freddie Mac products and offerings are designed in a manner that the industry can digest, implement and operationalize.

Ultimately, the most attractive aspect of Freddie Mac was the company’s deep focus on its mission, which is even more important in a challenging time for the housing market and the economy. After 12 months in this role, I have learned that the impact is even greater than I could have imagined, as we successfully brought liquidity, stability and affordability to the housing market despite the challenges of the past year.

For example, we helped more than 1.4 million families buy, refinance or rent a home in 2023. And, of the more than 800,000 home purchases we financed last year, nearly 51% of those who purchased a primary residence were first-time homebuyers, the highest share since we started tracking this statistic three decades ago. Our portfolio credit characteristics also remained strong, with the Single-Family serious delinquency rate at a historic low of 55 basis points at year-end.

I am pleased to share that we expect to hit each of our affordable housing goals for 2023. But our approach to affordable housing does not stop at our regulatory requirements. Instead, we view these efforts as part of the more comprehensive work they do to advance affordability — which includes leveraging new and enhanced solutions to get the job done. 

Here are five specific initiatives we used to Make Home Possible over the past year.

Connecting Borrowers with Down Payment Assistance

The number one barrier to homeownership among first-time homebuyers is affording a down payment. To meet this need, Freddie Mac built DPA One®, a free, one-stop shop that helps lenders quickly find and match borrowers to many of the more than 2,500 different down payment assistance (DPA) programs available nationwide. In addition, we have enhanced this tool by adding information on various local and municipal programs in 13 states, since our launch in October of 2023. We plan to reach more than 40 states by the end of 2024.

DPA One has received a very warm reception since launched in the fall of 2023, with over 3,000 lenders already registered to use the platform. These lenders can now explore down payment assistance programs that could benefit potential homebuyers.

Providing Down Payment Assistance to Put More Families in Homes

In addition to helping borrowers find DPA programs, Freddie Mac has stepped up to provide down payment assistance of its own. Last month, we announced that homebuyers earning 50% of area median income or less, subject to certain requirements, are eligible to receive a $2,500 credit that may be used to help with down payment and other closing costs.

This solution makes our down payment assistance offerings even more available and can be a vital lifeline for would-be first-time homebuyers who may struggle with the upfront costs of homeownership.

Reaching Families in Underserved Areas

Along the same lines, we are continuing to see real success reaching families living in underserved areas. For example, we have used Special Purpose Credit Programs (SPCPs) to help thousands of families living in underserved areas achieve homeownership through special underwriting or pricing, financial education, and down payment assistance.

In 2023, we purchased thousands of loans using our two-pronged approach: first, using our own SPCPs, BorrowSmart AccessSM and HeritageOneSM. Second, we purchase loans originated through lender SPCPs. These programs have made a considerable impact, but they are just one part of the broader work we do to meet our mission.

Enhancing our Products and Offerings

We also are continuing to make innovations to help potential borrowers with thin credit files, particularly those who might not have traditional 9-to-5 jobs or banking relationships.

This includes automated underwriting capabilities that allow lenders to look at consenting borrowers’ bank data to verify assets, income and employment status, understand monthly cash flow activity, and assess paystub details through direct deposit. We also now incorporate on-time rent payments in loan purchase decisions.

Lowering Costs in the System Through Innovation

We also helped reduce costs in the financial system through innovative programs and initiatives, such as the work we have done to reduce rising repurchase requests.

In 2023, we enhanced our communication, collaboration and feedback with our lenders and industry partners. Further, we innovated, and in 2024 launched a new, fee-based repurchase alternative pilot program for performing loans.

This work has created a positive trend in loan quality and materially fewer repurchase letters since the peak in early 2023. In fact, non-acceptable quality rates on incoming loans are more than 50% lower than their peak, and repurchase requests are trending down 50%-60% less than their peak.

Keeping repurchases low helps lower costs in the system, resulting in lower costs for borrowers.

What’s Next in 2024

As we look to 2024, it’s clear we will still face challenges, but we have set several goals for our team aligned to Freddie Mac’s overall mission and priorities. They include:

  • Continue to deliver on our mission plans and goals. Our mission is key to our success. But current economic conditions will pose challenges to achieving some of our goals. As a result, in 2024 look for us to develop and expand products and programs that continue to responsibly put more families in homes.
  • Continue reimagining our products and offerings. As we did in 2023, we will make further enhancements to our Loan Advisor suite of tools to help qualify more borrowers more quickly and efficiently, while continuing sound business practices. Already this year, we updated our automated underwriting tool with important enhancements to assess a borrower’s credit and will soon include trended data to perform a more robust risk assessment.
  • Practice credit and operational risk excellence: Given the current economic conditions, managing risk remains a top priority. Through investments in technology and other updates to our practices, we will ensure Freddie Mac’s decision-making processes remain best-in-class while addressing possible issues promptly.
  • Continue making progress on digitization: We’ve made significant progress in this area and continue our efforts to modernize our applications and tools. For example, we’re looking to implement new technology to automate, streamline and improve fraud tip submissions, making this process quicker, more efficient and bringing greater peace of mind to our lenders. We are also working to enhance our quality control technology to better improve efficiency, transparency, accuracy and the user experience.
  • Reduce cost to originate: We are committed to reducing costs to sellers and borrowers through the expansion of our digital offerings and by reviewing the costs directly charged to borrowers. This is particularly urgent in the current economic climate. In 2024, look for us to bring forth various new initiatives to make meaningful impacts in this area. 

In the past year, we’ve made meaningful progress, but there’s no shortage of work to further improve our ability to serve our lenders, industry partners and borrowers themselves. The importance, and the promise, of this work is why I joined Freddie Mac. Twelve months on, I’m still as excited about this work and its possibilities as I was the day I walked in the door.

©2024 by Freddie Mac.