The wonders of day 1 certainty
Nowadays, governments sponsored organizations Fannie Mae and Mac are working hard in a bid to streamline the mortgage industry. They try to make mortgage manufacturing secure and to acquire mortgage to be more efficient, Both enterprises are trying to enhance the experience of the originator and borrower as they offer different resources and toolkits. One of the programs for loan underwriting offered by Fannie Mae is Day 1 uncertainty.
With this program, it is possible to enhance the efficiency, cost effectiveness and speed of the mortgage process and therefore, benefiting both the borrower and the lender. Unfortunately, many lenders are not taking advantage of this solution. By understating how the Day 1 certainty works and modifying the internal operation, it’s possible to optimize the benefits. Lenders can be able to enhance their profitability even as they deliver a better customer experience.
The reason why Day 1 certainty was created was to transform the origination process of a mortgage. This is why it combines simplicity certainty and greater speed with a cost-to-produce that is lower. This is on top of improved risk management for the lenders. With the program, borrowers can now enjoy an improved and easy access to the mortgage credit. Some of the key features for the program include validation of the income, employment and assets of the borrower by desktop underwriters. One thing that you need to note about the program is that it also provide tools that can automate the entire underwriting process, even though the program, is quite different from Day 1 certainty program.
One huge benefit of the Day 1 initiative is that warranty and representation relief. This means that lenders get freed from the warranties and rep’s burden, from the day they sell the loan into a secondary market. Once the risk exposure of the lender is reduced to a repurchased loan that later have problems, the program is able to minimize the risk. This may later lead to lower provisioning for loans.
Some of the benefits of the Day 1 certainty program include:
- A designated provider who will validate the assets, employment and income helps to reduce the processing time and the turnaround time for underwriting the mortgage loans.
- Appraisal escalation that is potentially decreasing as a result of the collateral validation program.
- More junior underwriters being used in the processing of application as a result of a simplified process. This ensures a more efficient allocation.
Day 1 certainty enables some fewer touches throughout the process and therefore, underwrite the cycle time. This ensures that the whole process of getting a mortgage is reduced form 12 days to 1 day. On top of this, there is a also a reduction in the cost of processing the mortgage. The program also benefits borrowers. One of these benefits is the accelerated process of lending. When you find the mortgage lender advertise the closing of loa