Freddie Mac's Pilot Shifts Servicing Functionality to the Internet
In an initiative that could reshape how lenders transact loan servicing business with the secondary market, Freddie Mac has started a pilot program to develop and test a Web-based loan servicing system.
Currently one lender is participating in the pilot. Freddie Mac plans to add other "business development partners" to the pilot later this year, according to Patricia Chen, director of customer management at Freddie Mac.
She spoke at the California Mortgage Bankers Association's Western States Loan Servicing Conference here last week.
Freddie Mac hopes to build out the system to include more participants next year, particularly in the third and fourth quarters of 2004. That will be followed by a big push to convert lenders to the system in 2005, Ms. Chen said.
The Web-based servicing system will complement Freddie Mac's Web-based selling initiative, which allows lenders to price, commit and fund loans with Freddie Mac via the Internet, an initiative that was unveiled at last year's annual Mortgage Bankers Association convention.
Ms. Chen said that the servicing pilot is another part of Freddie Mac's overhaul of legacy systems that should streamline operations and reduce data entry requirements for lenders. Those legacy systems are being replaced with Web-based architecture that will eventually address the entire lending process - from underwriting and selling to servicing and default management, Ms. Chen said.
"Our focus on these efforts is to ensure you have a more streamlined and efficient way to do business with us," she said at the conference. "One of the great advantages is you input the data once and it goes all the way through."
Freddie Mac's intention is to integrate the online servicing functionality from loan sales all the way through default management functions.
Earlier this year, Freddie Mac began allowing servicers to submit mortgage insurance claims directly to Freddie Mac via Web-based technology through its "MI Access" program.
"What this means is you no longer need to submit claims to the MI firms. Freddie Mac will do that for you," Ms. Chen said.
Eventually, the online servicing system will replace MIDANET, which is an acronym for mortgage information direct access network.
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