GSEs vying to help lenders manage mortgage servicing rights

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Government-sponsored enterprises Fannie Mae and Freddie Mac are in a race to offer services and technology that help mortgage bankers raise cash from mortgage servicing rights.

Freddie Mac, for example, recently launched technology that helps manage the transfer process for mortgage bankers that are selling MSRs as its upgrades automation supporting loan and servicing sales.

"You have to take that servicing, all the data and documents, and move them onto [a new] system physically. That tends to be a messy process," said Hakan Beygo, senior director of single-family secondary execution strategies at Freddie Mac, in an interview. "So we said is there a way to address and make this process easier?"

At the same time, Fannie Mae is making plans to take services and technology that supports MSR sales a step further in June through improvements to the funding process.

"For lenders who want to sell us a loan and sell the servicing to a buyer we're trying to improve that," said Andrew Bon Salle, executive vice president at Fannie Mae, in a separate interview.

The technology improvements and additions the GSEs are implementing are a response to thin lending margins that are driving some mortgage bankers to sell or secure financing against their MSRs as well as implement cost cutting measures.

In addition to simplifying servicing processes, the GSEs are continuing to test drive pilot projects aimed at doing the same for origination operations, but some of these may take time to materialize.

Efforts to test the use of consumer bank information traditionally used to validate assets to also verify income and employment for W-2 employees, for example, are still due to be rolled out by Fannie to the full market this year, but the project is not ready for prime time yet.

Among hurdles that have to be addressed in automating the process are differences in the data sets different banks deliver, Desmond Smith, senior vice president and head of customer delivery at Fannie Mae, said during a session at the Mortgage Bankers Association's National Secondary Market Conference in New York.

"Banks don't have the same or similar ways to submit the data," said Smith.

"It is absolutely our goal to bring this out to all lenders," he said, but added, "I don't think I can give you a date right now."

Freddie Mac also has a similar pilot project in place, and also does not have a definite roll-out date yet, Senior Vice President Kevin Palmer said at the conference.

In its testing, Freddie is looking at issues like, "How do we instill the confidence that this is done in a very safe and secure way?" Palmer said.

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