BLOG VIEW: As we move into the new year, the mortgage industry continues to experience a time of great change and transformation, as new rules and regulations are being updated and introduced on a more frequent basis. Although the upcoming Home Mortgage Disclosure Act reforms have received the most attention from lenders, 2017 will also bring about significant new changes for Fannie Mae investor reporting.
Effective Feb. 1, Fannie Mae will implement new investor reporting requirements as a result of the Federal Housing Finance Agency using its regulatory authority to enact policy changes. The policy changes will affect all Fannie Mae loans and servicers, in addition to eliminating the single-family mortgage-backed security (MBS) “call-in” requirements. Although today’s mortgage industry is no stranger to changes when it comes to its day-to-day processes, what benefits does Fannie Mae anticipate to put servicers at ease as they prepare for the latest updates?
According to Fannie Mae, by eliminating the MBS call-in requirements, the industry is taking a step in the right direction toward greater efficiency and industry best practices that will positively impact time and effort for servicers. A couple of the key benefits include the following:
- Servicers will no longer need to calculate, send and reconcile pool balance data, as Fannie Mae can now rely on existing loan-level data from servicers to drive security balance processing; and
- The current process will be eliminated and, in turn, replaced with a timelier, more consistent workflow, in line with the rest of the industry.
How will this impact servicers?
For many servicers, the upcoming Fannie Mae changes and the benefits that accompany them sound great; however, in order to reap these benefits, the industry itself must embrace the changes. So, what should servicers expect to see moving forward?
Traditionally, servicers have reported to Fannie Mae each month. As the changes take place, one of the main areas servicers will feel an impact will be in the frequency with which they are now required to report to Fannie Mae. In the long run, the overarching goal is to decrease the number of reconciling issues with these latest changes. Today, many discrepancies are not identified until after the reporting cycle has ended, which can cause a significant headache. As part of the new requirements, loan activity reporting will be due on the 22nd of each month, which should result in servicers being able to better identify discrepancies earlier in the reporting cycle.
In addition, servicers will also be required to report detailed loan activity for all remittance types on a more frequent basis than before. Currently, servicers report to Fannie Mae on a monthly basis; however, with the new changes coming in February, the frequency will change to daily or periodic reporting processes. One point worth noting is that Fannie Mae – not the servicer – will take on the burden of reconciling the security balances.
Preparing for the changes
As with any and all industry updates, adequate preparation is needed in order to effectively update systems and processes for the new requirements. For more than a year, Fannie Mae has provided servicers and vendors alike with the tools and information necessary to prepare for the changes coming in 2017. Through a series of hosted webinars, documentation and regularly scheduled meetings, Fannie Mae has given the industry ample time to understand and prepare for the impending regulations. Servicers should have registered with Fannie Mae at this point, tested their servicing systems and identified procedural changes to day-to-day operations affected by the new requirements.
Feb. 1 is rapidly approaching. The time to make final preparations for the Fannie Mae changes is now. Servicers should be performing a final review of their current workflows and processes to identify any last-minute updates that may still need to be made internally to effectively meet the new requirements. For more information, visit fanniemae.com/singlefamily/mbs-call-in-elimination.
Susan Graham is president and chief operating officer of Financial Industry Computer Systems Inc., a mortgage technology specialist that provides cost-effective, in-house mortgage loan origination; residential mortgage servicing; and commercial mortgage servicing technology to mortgage lenders, midsize banks and credit unions. As president and chief operating officer, she is responsible for the overall management of the company’s day-to-day operations, strategic planning, customer relations and product development.