Improving Profitability Through Digital Mortgage

Maria Vergara Fannie Mae

Technology impacts what we do and don’t have to do…

Borrower Interest in a Fully Digital Mortgage Process

Very Interested

Somewhat Interested Not Very Interested

Not At All Interested

Both lenders and borrowers see value of end-to-end integration

Value of an End-to-End System For Lenders

Extremely Valuable Somewhat Valuable Not Very Valuable Not At All Valuable

66% Of borrowers are interested in a fully digital mortgage process

92% Of lenders would find an end-to-end system valuable

Borrower Lender

Source: Mortgage Lender Sentiment Survey®, National Housing Survey®

Most Difficult Part of Getting a Mortgage

Gathering financial information is most difficult part of process

Q: What would you consider the most difficult part of the mortgage process?

© 2018 Fannie Mae. Trademarks of Fannie Mae.

38%

13% 12% 9% 8% 7% 4%

Gathering all your financial information

Finding the right lender

Wait time/length of the whole process

Getting through the loan application

process

Reviewing final documents

Finding the right loan Getting your application approved

38% think gathering all the financial information is the hardest part

Q1 2018 National Housing Survey®

Time to Get a Mortgage: Reality vs. Expectation

Length of time to get a mortgage is too long

Q: How long did it take to get a mortgage (from application to close)? Q: How long do you think it should take to get a mortgage (from application to close)?

© 2018 Fannie Mae. Trademarks of Fannie Mae.

10% 22%

29% 19%

9% 9% 9%

31% 35%

14% 5% 3%

1 week or less 2-3 weeks 1 month 4-6 weeks 2 months 2+ months

How Long it Took

How Long it Should Take

75% think it should take one month or less to get a mortgage

Q1 2018 National Housing Survey®

How to Make the Mortgage Process Easier

Reduce Paperwork

Q: What, if anything, would have made the process of getting a mortgage easier? Please select the one that would have made the process easiest for you.

© 2018 Fannie Mae. Trademarks of Fannie Mae.

27% 20% 16% 11% 7% 5% 8%

Less paperwork/fewer forms

The ability to shop and compare loan

terms from multiple lenders at once

Less back and forth during the approval

process

Loan terms and costs that are easier to

understand

Shorter length of time from application

to closing

More responsiveness from your lender

None

16% want less back and forth during the process

20% think making it easier to shop and compare terms from lenders

27% say a reduction in paperwork

Q1 2018 National Housing Survey®

• Simplicity • Speed • Confidence

On the technology front, consumer expectations continue to rise

38% desire less

complicated way of

gathering information

75% believe it

should take less than 4

weeks

27%

Want less paperwork

Creating a superior borrower experience, driving operational efficiency resulting in reduced origination cycle times and providing freedom from representations &

warranties

DU® Validation Service

Freedom from paper-based processes with validation of income, assets, and employment through third-party data vendors

Appraisal Waiver Freedom from appraisal requirements on eligible transactions

Certainty on Appraised Value Freedom from reps & warrants on appraised value with the power of Collateral Underwriter®

(CU ™) when the CU risk score is 2.5 or lower

© 2018 Fannie Mae. Trademarks of Fannie Mae.

© 2018 Fannie Mae | Trademarks of Fannie Mae

VALUE & BENEFITS

EXCEPTIONAL CUSTOMER SERVICE

CYCLE TIME REDUCTION

DIGITAL INNOVATION

REP & WARRANT RELIEF

EMPLOYEE SATISFACTION

•  Dramatically reduce paperwork

•  May result in quicker loan approvals

•  Compete with cash offers

•  Help eliminate last minute requests for additional information

•  Potential shorter rate locks

•  Increase capacity of loan application volume

•  Utilize your human capital more efficiently

•  New vendors continuously added

•  Prep for new technologies that are coming in the near future

•  Keep up with the competition & borrower expectations

•  May result in reducing amount of capital required

•  Income •  Employment •  Assets

•  Commissions quicker •  Gain ability to focus

on more complex loans

•  Increased referrals

It’s a journey but customer feedback is positive and momentum continues

seeing an increase in customer satisfaction driven primarily by ease of use, less paperwork needs, and accelerated turn times.

Efficient technology is the highway to lowering origination costs and enhancing customer experience. Fannie Mae's Day 1 Certainty is the vehicle to take [us] down that highway.

Day 1 Certainty has cut the time from loan application to final approval from 50 days to 25.

a win-win, customer’s experience is improved through reduced documentation and accelerated closing dates, while we receive reps & warrants [relief] and operational efficiencies.

What We’re Seeing So Far

Lowering Manufacturing costs/cycle-time Desktop Underwriter Data Validation Service & Single Source Validation Improving customer experience ChatBots (NanoRep/AskPoli), APIs that help in loan data enrichment, drive exception based workflows Business Process Streamlining Policy automation & straight through processing for servicing expenses, Robotics Processing Automation

Innovation

Insights

Co-creating with

Customers

Agile

Test & Learn

Empower-ment

Collaborate

The Digital Operating Model culture has accelerated innovation

© 2018 Fannie Mae | Trademarks of Fannie Mae

RESOURCES

Reference Materials On-Demand eLearning Courses

Job Aids

•  DU Validation Service Reference Guide

•  DU Validation Service FAQs

•  DU Validation Service Testing and Integration guide

•  DU Validation Vendor List

•  Introduction to Day 1 Certainty

•  Implementing Day 1 Certainty: DU Validation Service, Property Inspection Waiver, and Certainty on Appraised Value

•  DU Validation Service: Quality Control Overview

View more eLearning courses and job aids on the DU validation service webpage.

•  Income, Assets, and Employment Validation Examples

•  DU Validation Service QC Considerations

•  Day 1 Certainty Prefunding QC Worksheet

•  Day 1 Certainty Post-Closing QC Worksheet

denotes resource is accessible with Fannie Mae SSO credentials. Contact your Fannie Mae representative to receive the document if needed.

© 2018 Fannie Mae. Trademarks of Fannie Mae.

Thank You! Maria_Vergara@Fanniemae.com