On Nov. 17, Freddie Mac announced on next-generation automation technology to streamline and strengthen its Single-Family quality control (QC) process. Quality Control Advisor Plus will further enhance loan quality, drive efficiency and lower costs through technology that automates the QC review and remedy process on delivered loans. A phased onboarding of Quality Control Advisor Plus is underway and will be available to all lenders by year-end.
“Quality Control Advisor Plus will cut months off the current QC process for most lenders,” Sonu Mittal, executive vice president and head of Single-Family Acquisitions at Freddie Mac, said. “This new platform doubles down on our transparent and proactive approach to modernizing our QC processes. It provides considerable efficiencies for lenders so they can quickly identify and remediate issues as early as possible to minimize reoccurring defects and improve loan quality.”
The new platform is an integrated solution that unifies previously separate QC systems and includes over 500 lenders that are already taking part in Freddie Mac’s performing loan repurchase alternative pilot, which is broadly available to all lenders who want to participate. To date, participating lenders have saved millions of dollars on performing loan repurchases collectively. Additionally, the pilot is incentivizing better loan quality, as participating sellers had a 26 percent lower non-acceptable quality rate compared to those not in the pilot.
By streamlining the QC process to serve an evolving market, lenders can address issues like missing documents with immediate, real-time alerts that offer a view into every step of the loan review process. This can reduce wait times by months, provide feedback on loan quality closer to origination, limit back-and-forth communications and identify, resolve and remediate loan defects. It also allows lenders to manage loan remedies and view samples of defects, access multiple reports, check loan review status in real-time and upload loan files and missing documents.
This solution is designed to deliver more consistent decision making and standardized communication through newly implemented messaging that aligns with industry standards so lenders can expect reliable feedback. Lenders can also now upload as many as 250 files at once and receive immediate confirmation of receipt.
Income-related deficiencies continue to be the primary driver of loan defects. To address this challenge, Freddie Mac recently introduced a new income calculator that allows lenders to more accurately assess the criteria of borrowers with a variety of income sources, improving loan quality and increasing efficiency in underwriting. More than 1,000 lenders are already using the tool and have made over 15,000 submissions to help reduce loan defects and repurchase risk.
“We’re leveraging innovation at every stage of the loan cycle to deliver tangible benefits that help lenders drive efficiency, reduce costs and further improve loan quality,” Mittal said. “Lender repurchase requests are down 56 percent from their peak in 2023, and industry feedback around the recent actions we’ve taken to improve loan quality has been overwhelmingly positive.”