How To Comply With Collateral Data Delivery FNC, Inc. Web Conference March 16, 2010 Program • FNC, Inc. • History / Data Management • Collateral Data Delivery • Field Experience • Data Standards • Questions & Answers 2 Speakers • FNC, Inc. • Shawn Telford, Director, Product Management • Mike Mitchell, Chief Strategy Officer • JJ Neilson • Assistant Vice President, Team Lead Loan Risk and Recovery, Collateral Management, SunTrust Mortgage • Kirk Rzasa, • Senior Business Consultant, Quicken Loans • Carol Luitjens • Chief Marketing Officer, FNC 3 Questions • [email protected] • “Chat” box submission 4 Conference Web Page • Today’s PowerPoint • Audio • Questions 5 Shawn Telford Director, Product Manager About FNC • Focused on collateral since 1995 • Collateral management platforms • Collateral Management System® (CMS®)- Enterprise platform • Collateral Headquarters™ (CHQTM ) - Software-as-a Service • AppraisalPort® – work portal for >58,000 appraisal vendors • Generally Accepted Appraisal Rules™ (GAAR®) 7 About FNC • Platforms are used to ensure: • • • • Appraiser independence Appraisal/Valuation compliance Market trends and tracking Data extraction • Clients share data through our National Collateral Database™ • Top US financial institutions use FNC platforms, GAAR and CDNA analytics to process, review and underwrite appraisals. 8 How is FNC Unique? • FNC focuses on • • • • • Regulatory compliance Data extraction and shared data/documents Collateral analytics Deployment of an enterprise application Process management and automation • FNC focuses on data extraction, regulatory compliance and streamlining the collateral decision-making process for our clients in all areas including origination, servicing, and secondary/capital markets. 9 All About Data • History of open XML for appraisals • 1997/98 • FNC Worked with Appraisal Institute to create open XML appraisal standard known as AI XML – AI ReadyTM • FNC wrote objects and gave them to appraisal forms vendors who used them to create XML • We can deliver any XML standard the client desires including MISMO • All major appraisal forms companies support AI Ready 10 All About Data • PDFs and paper to data • Developed data extraction from PDFs • First generation PDFs—a term FNC “coined” • Second generation PDFs—essentially faxes we convert to data • All services can be returned to institution as datastream including public record data, tax assessed values, AVMs, BPOs, appraisals, other inspections, and reviews. 11 Why is the Data Important? • Process and Workflow automation • Regulatory Compliance • Standardized Review and Decisioning • GAAR Compliance • GAAR Risk • Appraisal Score • • • • Objective, Enterprise-wide Quality Control Transparency…at the loan level Vendor performance measurement & tracking Reporting and internal policy compliance 12 What is the CDD? • Fannie Mae created a stir by announcing the CDD (Collateral Data Delivery) initiative May 2009 • Requires lenders to deliver appraisal data prior to loan delivery • “Effective on a date to be announced, but no earlier than July 1, 2010” • Appraisal must be delivered as XML or PDF (fees charged for PDF’s) • Lenders may integrate directly to CDD or use the CDD web portal to upload 13 Fannie is First Out of the Gate • Fannie’s CDD is the first secondary market initiative requiring appraisal data delivery. • Freddie Mac has publicly indicated they also would expect appraisal data delivery for loans they purchase • HUD has indicated a strong interest in accessing appraisal data as part of their insuring process • Transparency of collateral valuation is becoming a focus, and having the appraisal data is key to creating that transparency 14 What is the Status of the Fannie CDD? • Currently the CDD is in pilot with a limited number of lenders • Fannie is actively engaging their customers, setting expectations and answering questions • Quicken Loans working with FNC is currently piloting a direct integration(XIS) to the CDD • The FNC CMS system used at Quicken Loans will facilitate delivery to the CDD and the associated exception handling process • Exception handling will include automated overrides, queue managed overrides, and appraiser edits/ resubmission 15 Mike Mitchell Chief Strategy Officer Updates from the Market JJ Neilson, Assistant Vice President, Team Lead Loan Risk and Recovery, Collateral Management, SunTrust Mortgage, SunTrust Mortgage • Importance of Appraisal Data • Importance of Managing the Appraisal Data 17 Updates From The Market Kirk Rzasa Senior Business Consultant, Quicken Loans • Appraisal Review Management • Quality Control • CDD Pilot • AI Ready 18 Moving Forward with Data • Complying with CDD and other appraisal data delivery initiatives to the secondary market needs a global approach • Standard process for all channels & investors • Leverage enterprise collateral platform for procurement, review, scoring and investor delivery • Avoid custom process for each investor • Data value to enterprise goes beyond CDD 19 Have a Single Standard Process • Simplify a standard “best practice” process • Expect new investor requirements, new XML data “flavors”, new appraisal requirements, new appraisal vendors or trading partners • XML is like ice cream….. • “Cleanest” data created by the appraiser • FNC recommends AI Ready • AI Ready is ALL the data in the appraisal. • The data is validated by the appraiser before submission to the lender client 20 Data Delivery Via FNC GatewayTM 21 Four Simple Steps To Comply 1. Trigger: Which files will you send to CDD (Secondary Market) – by specific loans or by status (e.g. clear to close) 2. XML Data Package: Creating the correct package of XML data – MISMO 2.6 vs MISMO 3.0 vs Other with “wrapper” and other attachments 3. Managing the Exceptions: Front end scrubbing with GAAR and back end process of overrides, edits, revisions & resubmissions. 4. Storage and Management: Managing of the CDD (and other Secondary Market) receipts and approvals for inclusion in the loan delivery. 22 CDD TAKE AWAYS • Create a standard, robust process • All Channels • All Investors • All Vendors (current and future) • Exception Management is Critical Path • Automated Overrides • Queue driven Overrides • Revised Appraisals/Resubmission • XML is like Ice-cream… 23 Questions • Today’s Questions • Chat Function • [email protected] • [email protected] • Collateral Vision.com • On-going discussion (blog) © 2010 FNC, Inc. 24 Thank You • Questionnaire 25