To gain a competitive advantage in the mortgage lending space, it is often necessary to acquire specialized knowledge and capabilities that provide choice, confidence, expansion opportunities, and the ability to create efficiencies in time, resources, and costs. Being designated as an approved seller/servicer by Freddie Mac is strategic assistance to a business and its borrowers.
The prospect of gaining this advantage can seem daunting or often misunderstood, due to myths surrounding the complexity and timelines of the approval process and misunderstandings about the short- and long-term benefits of this effort. Helping organizations understand the facts is one way to bring collective power to the marketplace. Let’s break down some key considerations.
Abundant resources
In fact, Freddie Mac’s approval process is easy to follow, streamlined, and efficient. Additionally, and perhaps most importantly, Freddie Mac has a dedicated team entirely dedicated to lender success, providing guidance and a customized onboarding experience. In addition to the resources and personal attention provided by Freddie Mac team members, there are industry advisors such as Cambridge One, LLC, which specializes in working with lenders to secure their GSE (Government Sponsored Enterprise) approval.
Jennifer Whip, principal of Cambridge One, is an experienced mortgage industry consultant. HP spent most of his career in senior roles at Fannie Mae. When she retired from that position, she realized there was pent-up demand from lenders for help obtaining GSE approval. Working with over 175 lenders has given her insight into the common pitfalls and misconceptions that most people face. “Many lenders put off applications because they’ve read myths about the time frame and complexity of the process. Our goal is to guide them through the task efficiently, making a seemingly daunting process manageable.
process
It is widely accepted that one of the most difficult parts of becoming an approved Freddie Mac seller is overcoming misunderstandings about what is involved and realizing that an organization can be a candidate. Concerns about the difficulty and length of the approval process are unfounded as the time from application to approval is significantly shortened. “Freddie Mac continues to significantly improve the process for approving sellers. While every experience is unique, our dedicated and knowledgeable team takes a consultative approach so applicants are prepared and confident to do business with us,” Freddie Mac said Christina Randolph, Vice President of Distribution Engagement for American Single Family Sellers. “We support applicants every step of the way and employ subject matter experts to help overcome unique obstacles and proactively identify optimization opportunities. It’s easier and faster than most people think. The key? Preparation. Jennifer Whip adds: “If you have well-documented policies and procedures and corresponding internal processes in place from the start, it will reduce friction and make it easier to get through. “
With Freddie Mac, potential sellers can be guided through the pre-application review and application process by having access to dedicated representatives. Best practices show that proactive communication, reminders and guidance can help ease the transition for lenders by minimizing the potential for delays and clarifying expectations. The process is quite simple and generally has four steps: pre-application assessment; submission of application and necessary documents; onboarding to establish bank and system access and training; and review of readiness to start delivering operations. Detailed resources and guidance are available to support each stage.
Operational effectiveness and commitment
Approval of a seller’s application involves several operational requirements that may require the organization to evaluate its current processes and reporting in preparation for a new partnership, but such efforts will result in significant operational benefits. Strict enforcement of quality control and compliance reviews can improve operational standards and related risk management aspects. Jennifer Whip of Cambridge One talks about the inherent advantages of this approach: “Having formal meetings and regular reviews transforms an organization. Lenders can demonstrate compliance obligations and ensure compliance by proactively addressing costly inefficiencies and repeated mistakes in their operations. Improve their operations. What may seem like a hassle at first can instantly turn into a competitive advantage, ultimately increasing efficiency and profitability and reducing risk.
Advantages of growth and stability
One of the strategic advantages of having Freddie Mac approved is growth and stability. Product line expansion to incorporate new mortgage products and known risk appetites can help reach new borrower groups, attract more buyers to close transactions, and improve the customer experience by meeting unique needs. Organizations can evolve to retain service rights, expand geographies, flexibly manage their portfolios, and more—the potential avenues for revenue are vast. “GSE approval is really a springboard for lenders looking to advance their businesses with greater independence and control over the impact on business results,” Whip said.
Freddie Mac’s Christina Randolph and Giuseppe Grieci, Senior Director of Single Family Seller Engagement Pricing Strategies, were able to give a quick overview of what partnering with Freddie Mac can offer potential sellers Some of the key advantages:
- fluidity- Enable more borrowing capital and risk mitigation measures
- Mortgage products – Expand business areas and meet unique borrower needs
- Insights, Analysis and Research – Access industry-leading data to aid decision-making
- technical skills – Provide speed, accuracy, ease of use, efficiency and streamlined processes
- Reserved for repairs – Create opportunities to expand business and profitability
- Cash and Guarantor Execution Options – Meet current and long-term business goals
- Mortgage Process Innovation – Enhanced functionality leads the development of the lending ecosystem
- Partnerships and subject matter expertise – Collaborate to optimize your business and overcome obstacles
For proof of this, look no further than the coronavirus-era mortgage market, which continues to have an impact on today’s market. This is a time of fear and uncertainty, and lenders must navigate volatile market conditions and unforeseen business pressures. Sellers approved by Freddie Mac can continue to operate and move forward, while other lenders may have to implement a controlled retreat. Giuseppe Grieci of Freddie Mac says, “Becoming a qualified Freddie Mac seller means you can stand strong through any wave.”
more than a milestone
Becoming an approved Freddie Mac seller is more than just a business milestone, it’s a lever that drives confidence, stability, flexibility and growth for your lender. The approval process is confidential and streamlined, providing a clear path to realizing significant operational and strategic benefits. Partnering with Freddie Mac opens new doors for lenders looking to solidify their position in a lean, competitive market while also strengthening current operations to meet future challenges. Partnering with the GSEs is an investment in their future, which means operational excellence and market resiliency regardless of macroeconomic or real estate headwinds or tailwinds.
If your organization is interested in learning more about becoming an approved Freddie Mac seller and/or service provider, please explore these resources.
