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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 32 December 2023 C O V E R S T O R Y Merritt: Rates will be the first to bend based on the pressure from other economic factors. The Fed has kept rates consistent recently, and it is easier to see circumstances that would lead to lowering rates in the near term. Once rates begin to lower, we will see some relief in affordability. Q: Are there any trends in technology you are witnessing being employed by the industry to streamline operations? Madigan: There are four major trends I am seeing: eNote adoption, APIs (application programming interfaces), automation, and Big Data. I have seen an enormous shift in lenders' willingness to adopt technolo- gies that support eClosing, like eSigning, eVaults, eNotarization, eRecording, and eNotes. The ability to electronically record eNotes and securely store loan docu- ments in a centralized repository creates a single source of truth from origination to servicing, offering greater convenience for consumers and huge efficiency gains for lenders. Storing electronic documents in a unified vault creates a continuous lineage, simplifying access for servicers and attor- neys in the event of foreclosure. Lenders are becoming increasingly tech-savvy, strategically integrating APIs into various aspects of their operations. Technology providers are responding in kind, making APIs available to lenders so they can seamlessly connect with different channels and capabilities. In addition to enhancing operational efficiency, API (ap- plication programming interfaces) adoption helps save money by eliminating the need for developing custom software work- arounds. It also allows the lender to adopt and implement new solutions quickly. Automation tools will play a more significant role by allowing faster excep- tion management in tasks and workflows. Increased computing power assists with the development of more sophisticated rules, allowing systems to complete more work in the background without human intervention. A prevailing trend is the increasing utilization of Big Data. As an industry, we are becoming more adept at extracting meaningful insights from the vast amount of data available and translating them into actionable strategies. When analyzed cleverly, the insights derived from data are nearly limitless. They can support tangible efforts like enhancing customer retention, identifying prospective clients, and deliver- ing better solutions to the end consumer. Wells: For mortgage servicers, cross- platform data integration is becoming more important as machine learning and automation present opportunities to improve the customer experience, operational efficiencies, compliance, reporting, and everything in between. For our company, having a fully integrated technology platform has helped us see the cumulative value these tools offer for both homeowners and our subservicing clients. On the default side, for example, a module within our homeowner portal guides customers through the mortgage assistance application process step by step. If they have trouble finding or completing the application, they can tap our virtual assistant for quick help 24/7. Integration with our loss mitigation system allows us to automate processes that match homeowners with assistance plans based on their unique situations and mortgages. Our claims and loss analysis technology, which identifies and prioritizes advances eligible for reimbursement and processes claims, integrates with our loss mitigation and foreclosure systems, as well as our system of record. In addition to timely and compliant claims submissions, this degree of data integration supports full transparency for our subservicing clients with real-time an- alytics and reporting. When technologies across a servicing platform talk to each other, AI offers unlimited opportunities to streamline and improve processes across the board. Williamson: Through digital tools, Fannie Mae is committed to providing more upfront certainty and reducing risk for lenders, such as Day 1 Certainty ® , which helps lenders verify borrower income, employment, and assets. In an analysis of our single-family loan data, we found that when lenders take advantage of at least one Fannie Mae digital tool, a loan is 33% less likely to produce defects compared to a loan with no form of validation. And if multiple tools are used, the defect risk is reduced by 50% to 70%. These tools include Collateral Under- writer ® , which uses appraisal data and advanced analytics to help identify and research appraisals with overvaluation, undervaluation, and appraisal quality. We continue to invest in Collateral Underwriter, as well as other tools and initiatives to make the home valuation process more efficient and accurate. For decades, there was just one way to confirm the property value for home purchase or refinance loans: an appraiser visited the property armed with a clipboard, tape measure, and camera, then performed an analysis and submitted a report. In recent years, the gear might have been upgraded to a tablet computer and laser measuring device, but the process was the same. Earlier this year, Fannie Mae made valuation modernization updates to our Selling Guide to leverage technolo- gies, data, and analytics to enhance the management of collateral risk, making the process more efficient for lenders, bor- rowers, appraisers, and secondary-market investors. This transition offers a spectrum of options to establish a property's market value, with the option matching the risk of the collateral and the loan transaction, and leverages technology to foster a more efficient, understandable, and impartial valuation system. This included a new valuation option—Value Acceptance + Property Data—which utilizes property data collection by a professionally trained and vetted third party, such as an insurance inspector, real estate agent, appraiser, or even a trainee appraiser, who conducts interior and exterior data collection on the subject property guided by an application on a hand-held device. Upon completion, the lender or its representative delivers the data to our application programming interface. This technology-based process reduces origination cycle time and may reduce borrower costs while promoting safety and soundness by obtaining current observations of the subject property. In addition, the adoption of cut- ting-edge technology, digital transforma- tion, and process updates are changing the