GSEs target income and occupancy to cut buyback risk

Fannie Mae and Freddie Mac officials said the government-sponsored enterprises (GSEs) saved borrowers billions of dollars by ditching traditional appraisals and streamlining title requirements. Now the mortgage giants are targeting income verification and occupancy fraud to reduce closing costs and repurchase risk. Fannie Mae, which began developing appraisal alternatives before the COVID-19 pandemic, has processed roughly 5.4 million loans using alternative valuation methods, generating a reported $3 billion in consumer savings through midyear. “One example that I feel we’re really mature in is valuation modernization,” Jake Williamson, executive vice president and head of single-family at Fannie Mae, said during a session on Tuesday at the Mortgage Bankers Association (MBA)’s Annual Convention and Expo in Chicago. Meanwhile, Freddie Mac said it delivered nearly $3 billion in borrower savings since 2017 through its Automated Collateral Evaluation (ACE) appraisal waivers and ACE+ Property Data Report (PDR) options. “While we are doing those appraisal waivers, we are continuing to see that quality remains in a good place, so it’s not compromising safety and soundness,” said Sonu Mit...