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55 July 2024 July 2024 » E A B O U T L O O K Q: What are you most focused on right now, and how are you working to address it? Gottheim: We continue to focus on improving the loss mitigation experience for the entire mortgage ecosystem. This encompasses improving loss mitigation policy, processes, and technology that benefit borrowers, servicers, and Freddie Mac while furthering our mission of sustainable homeownership. We recently announced updates to the Flex Modification®, our flagship modifica- tion program, which follows updates to the standard payment deferral program we an- nounced and implemented last year. With these upcoming changes, we expect to see an increase in borrower eligibility as well as more equitable payment relief outcomes for borrowers who receive a Flex Modification. These changes flow through to our processes and technology, including Resolve®, our default management and loss mitigation platform. Working hand-in-hand with our servicers and their service providers and vendors, we aim to accelerate the adoption of these updates compared with past changes. Once implemented, servicers will be able to obtain near-real-time decisioning and terms from Resolve and provide near-real-time responses to distressed borrowers, reducing the time and stress that results from difficulty in making your mortgage payments. The way in which we've rolled out Resolve—incrementally, focused, and through ongoing collaboration with ser- vicers and service providers—has been one of the greatest servicing achieve- ments I've witnessed in the 13 years I've been with Freddie Mac. Our goal is to use Resolve for all loss mitigation decision- ing and settlement as soon as possible, potentially by the end of the year. Q: What risks are keeping you up at night? Gottheim: Not surprisingly, the risks that keep me up at night are the ones that, while out of our control, are those that we need to understand, qualify, quantify, and mitigate. The interest rate increases of the past few years, for example, have impacted borrowers' ability to obtain new credit and investors' cost of funding and loss miti- gation. Additionally, since the pandemic, we've seen sharp increases in property tax assessments and rates as well as property insurance premiums. We're still in the early stages of understanding the long-term impacts on the mortgage ecosystem resulting from increases in the frequency and severity of natural disasters. It remains to be seen whether these events and their related insurance costs will eventually result in increased delinquencies and defaults. Q: What problems do we need to solve as an industry? Gottheim: We've seen a continual increase in servicing transfers, with most transactions transferring loans to nonbank servicers. We've made great strides over the years in facilitating these transfers to reduce time and friction for both servicer counterparties as well as Freddie Mac, and while some of these improvements have benefitted borrow- ers, there's still far more work to be done. A servicing transfer can still be difficult for a homeowner—especially a dis- tressed borrower—and we need to find solutions to ease these pains. One answer is the Mortgage Industry Standards Maintenance Organization (MISMO) transfer of servicing data standardization where Freddie Mac is a key participant, which looks to create data standards to streamline servicing transfers. Other solutions are needed to continue reducing these transactions' risks for servicers and investors. Most important are initiatives to reduce the impact on borrowers, who are not a party to, or do not have any say in, servicing transfers. This is challenging work and will take a collective approach from every corner of the industry. Jake Williamson SVP of Single-Family Collateral & Quality Risk Management, Fannie Mae Williamson: Jake Williamson is respon- sible for oversight and management of all end-to-end collateral, loan quality, and operational risk capabilities. These duties include front-end collateral policy design, loan quality control activities for both credit and collateral, condo standards, property valuations designation and mod- ernization, appraisal bias oversight, real es- tate liquidation options, and Single-Family operational risk management. Q: What are you most focused on right now, and how are you working to address it? Williamson: Especially in this difficult homebuying market, we are continuing to advance our efforts to strengthen loan quality performance by improving the capabilities of our digital tools. In May 2024, we enhanced our Income Calcula- tor to help mortgage professionals better serve the growing number of mortgage applicants in the United States who are self-employed and don't have traditional sources of income. Using tax returns, our free, web-based Income Calculator calculates self-employment income be- fore the lender submits the loan case file to Fannie Mae, providing lenders with an accurate, validated income amount for use in the underwriting process. We've also recently introduced new "It remains to be seen whether these events and their related insurance costs will eventually result in increased delinquencies and defaults." —Benjamin Gottheim, VP, Servicing Policy, Single-Family Portfolio & Servicing, Freddie Mac