Today, Freddie Mac reported that it is automating its underwriting process to further save costs, increase efficiency, and enhance the origination process for lenders and borrowers.
Due to the U.S. Federal Housing FHFA Direct’s requirement that the organization use technology, this new technology—which uses machine learning—is now part of Loan Product Advisor (LPA) and is enabling on-hold innovation, cost reduction, and customer happiness, according to William J. Pulte, FHFA Director and Chairman of Freddie Mac’s Board of Directors.
“It’s the year 2025, and the time to streamline the homebuying experience is now. Under the leadership and guidance of Director Pulte, we expedited this version of LPA to increase efficiency and further lower costs,” said Sonu Mittal, Freddie Mac’s Executive VP and Head of Single-Family Acquisitions.
Additionally, Freddie Mac is introducing Freddie Mac Income Calculator, a free online tool designed to assist prospective homebuyers in the gig economy by facilitating lenders’ ability to more precisely and quickly determine the income of wage earners and self-employed borrowers. Additional choices to account for social security, pensions, and rental income will be added later this year.
“After the last 4 years of astronomical inflation, it is important that we lower costs any way we can, and we encourage lenders to use this technology to pass savings onto customers, effective immediately,” said William J. Pulte, Chairman of Freddie Mac.
A number of other improvements in the update also reduce costs, such as preliminary information on the automated collateral evaluation (ACE) waivers, which have already helped families save over $2 billion in appraisal expenses since 2017. Additionally, it contains updated, customized information regarding Freddie Mac’s purchase requirements in the form of LPA Choice® feedback messages that lenders may use to enhance originations and save time and money. An additional 18,000 borrowers are now eligible for a mortgage with an emphasis on safety and soundness thanks to LPA Choice.
According to a recent analysis, lenders who use machine learning-based automations through LPA have faster cycle times, save money, and have higher client satisfaction. Cost savings of up to 40% can be achieved with a fully digitalized mortgage procedure. Lenders who use Freddie Mac to optimize automation are specifically creating loans that are $1,500, or 14%, less expensive and typically have a 5-day quicker loan production cycle time.
The latest improvements to LPA are accessible right now. For precise release dates on their LOS systems, lenders should inquire with their platform providers.
To read more, click here.
