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69 If buyers can automate 80% of the tasks involved with processing documents and identifying and resolving data discrepancies, they only have to apply their full-time employees on the 20% that are the exceptions with conditions that need to be cleared. systems often fail to detect whether there are credit reports for both borrowers or whether all the pages of the credit report are in the file. New technologies, however, can. ese technologies can be implemented at extraordinary speed, often in as little as two days. ey also allow sellers to drop and drag loan files into a secure, online portal used by both buyers and sellers. If there is something wrong with one or more loans, such as a missing document, both parties can see the errors and address them through one communication platform. Even if a buyer outsources its due diligence to a third-party provider, that third party can log into the portal and perform the required work in a secure, web-based environment. Plus, using APIs, data and documents can be easily integrated into a buyer's servicing system. is "leap" in MSR trading innovation has already been achieved with great success by Freddie Mac through its Freddie Automated Servicing Transfer (FAST SM ). e technology behind this tool has greatly streamlined MSR transactions, saving time and lowering costs by standardizing and simplifying the exchange of documents and data during servicing transfers. FAST SM uses the same type of machine learning document processing automation and data extraction technologies mentioned earlier, which can create a verified and validated stream of data out of digital images and scanned documents. THE REAL PRIZE—LOWER COSTS Making MSR trades faster by applying automation to normalize and standardize the process creates enormous potential for cost savings, so much so that it might catch buyers off guard. If buyers can automate 80% of the tasks involved with processing documents and identifying and resolving data discrepancies, they only have to apply their full-time employees on the 20% that are the exceptions with conditions that need to be cleared. is means they can significantly lower staff costs or simply deploy their teams to other work. For many buyers, this could also surface an opportunity to reduce the army of business process outsource (BPO) staff needed to work on large trades and the corresponding FTE expense. By automating MSR transfer tasks, buyers may find themselves with adequate in- house staff to perform due diligence work on their own. ere are other benefits, too. Because MSRs being bought require fewer manual touches, there's fewer chances of errors. By shrinking the amount of time it takes for transfers to be completed and loans absorbed into their servicing system, buyers can move on to the next MSR acquisition much faster. at's good news, as we have seen a spike in trades over the last 60 to 90 days. ese benefits seem to be why the number of buyers that are automating MSR transfer work has soared over the past year. In fact, our own platform, LoanLogics IDEA™, provides 95% coverage of the top co-issuance buyers for MSRs. Just this past year, we have also ramped up support for the bulk market, assisting over 50% of these large buyers. When these technologies are combined with data standards, they can revolutionize the secondary and servicing markets. By standardizing MSR trading tasks, bottlenecks created by the wide disparities in loan file delivery simply disappear. Currently, the only barrier that remains is the willingness to change. As a matter of fact, for all its faults, there are still many people who prefer the DeLorean—even though today's hybrid cars would leave it in the dust. But for most drivers, and for most mortgage participants, knowing what's under the hood is what really counts. Dave Parker is Chief Product Officer for LoanLogics, a Jacksonville, Florida-based provider of loan quality technology for mortgage manufacturing and loan acquisition. He is responsible for defining and executing the vision and direction of the company's product portfolio and designing new solutions for the industry's current challenges. He has more than 30 years' experience in mortgage and technology. Inquiries can be sent to LoanLogicsInfo@LoanLogics.com.

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