MCT Whitepaper: Getting Started with Agency Approvals

A WHITEPAPER BY JENNIFER R. WHIP, CMB®, MICHAEL DRAYNE & MCT

This whitepaper outlines why having a Fannie Mae, Freddie Mac, or Ginnie Mae approval adds value to a mortgage company or depository and offers some important tips on how to obtain that valuable approval.

Receiving your GSE or Ginnie Mae approval not only adds value to the net worth of mortgage lenders, but several other doors also become open with these approvals.

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This can be a cumbersome process and requires preparation in many areas of your business. Before getting started with the approval process, it is important to learn the details to be successful. Learn how direct access to agencies, additional income streams, and a lifeline during market volatility provide additional value for mortgage lenders with these approvals.

About the Whitepaper:

Success under the Ginnie Mae MBS program usually means strategizing well in advance of an application about how your firm needs to develop to reach a higher level of capability. Read the whitepaper to learn more!

Topics Include:

  1. Why Originators Should Seek Agency Approval
  2. Key Components for Agency Approval
  3. Common Challenges and Solutions in the Approval Process
  4. Steps for Applying for Approval

Download our whitepaper today to learn more about agency approvals!

Whitepaper Contributors:

Michael Drayne

Principal, Drayne Advisory LLC

Michael Drayne’s long mortgage capital market career began in the private sector, where he managed secondary market and related functions for mortgage banking subsidiaries of two regional banks. He then spent over a decade as a senior official at Ginnie Mae, where he oversaw the management of the agency’s relationships with its lender/servicer issuers and led its strategic planning and policy operation. Today he offers advisory services as an independent consultant, specializing in housing finance system policy issues, and working with firms who want to expand their presence in the government MBS sector.

Jennifer R. Whip, CMB®

Principal, Cambridge One, LLC

Jennifer Whip is principal for Cambridge One, LLC, a banking and mortgage banking consulting firm that assists lenders with their GSE relationships, including new lender approvals.  Most recently, Jennifer was managing director for Garrett, McAuley & Co., a position she held following her retirement from a 26-year career at Fannie Mae.  While at Fannie Mae, Jennifer was the lead executive responsible for driving the diversification and growth of its single-family business and expanding its offering of new products and tools to help its clients be successful.

Jennifer currently serves on the Boards of Directors at New York Community Bancorp, Flagstar Bank N.A., Abacus Federal Savings Bank and Chesmar Homes.  She serves as advisory board member for Radius Financial.  She was also named to Diversity Journal’s 2013 Women Worth Watching.

Jennifer is a graduate of the University of Colorado with a BA in Economics, Villanova University with an MBA, and the Executive Development Program at Harvard Business School. Jennifer is a Certified Mortgage Banker and volunteers with the CMB Society as instructor, sponsor, examiner, and content writer.  She has been a frequent guest speaker at industry conferences and has been in the mortgage industry for more than 30 years.

Featured Whitepaper Excerpts:

Direct Access to Agency Technology, Pricing & Support

Receiving agency approvals opens doors to new technology, data, and other tools not available for those who are unapproved. Direct sellers have access to the full suite of products and pricing, like Fannie Mae’s Desktop Underwriter. While Fannie Mae permits unapproved sellers to access its underwriting engine through Desktop Originator, that originator never “owns” the file which takes away some of the control. These advantages can be an excellent recruiting tool for top branches and loan officers (LOs) as it provides increased flexibility to the lender during the origination process. Other benefits for direct sellers include data access, warranty relief, and formal rebuttal capabilities on repurchase demands. It is important to ensure compliance with all GSE and government loan guidelines and requirements for the delivery and sell of mortgages, however, once these are operationalized, approved sellers may experience streamlined operational processes that simplify the overall delivery and sale of mortgage loans. Approved sellers can review GSE and government loan guidelines against other investors in the secondary marketplace and may find additional lending opportunities may exist where typical overlays could be applied by aggregators.

Approved sellers will need to consider delivery of loan data to the agencies as they get approved. Sellers must ensure they collect the appropriate data to transmit to the agencies for delivery. Data collected by the agencies has grown over the past decade as ULDD and other reporting components have expanded. Sellers can check the compatibility of their LOS with the requirements laid out by the agencies to create data exports or transfer the necessary data to the agencies for delivery purposes. As technology continues to improve, the ease of passing loan level data could improve with time.

 

Servicing Approvals Add Potential for New Revenue Stream

Not every seller to Fannie Mae and Freddie Mac has to retain servicing, but the ability to additionally obtain approval to service or subservice loans will lead to opportunities to build a future income stream through servicing income. Servicers report that in lower origination periods, as we are experiencing now, the servicing operation generates cash flow that can sustain the lender until the market improves.

Unlike with Fannie Mae and Freddie Mac, becoming a Ginnie Mae issuer requires entry into the world of loan servicing. Once established, issuers have the option of releasing Ginnie Mae servicing but must always maintain an active servicing portfolio to retain their approval. Ginnie Mae approval therefore means stepping up to being a loan servicer (including through the use of a subservicer).

Ginnie Mae approval, on top of FHA/VA/USDA approval, also carries with it the ability to offer the “mission” lending programs sponsored by these agencies without intermediation by aggregators and without enforced loan repurchases such as those utilized by Fannie Mae and Freddie Mac.