Day 1 Certainty Best Practices for Mortgage lenders
Best practices for benefitting from Day 1 Certainty through the Fannie Mae DU® validation service
Process changes are challenging, but automated validation can save lenders time and money.
Fannie Mae’s new Day 1 Certainty™ program is designed to make the mortgage loan process faster. But since it rolled out last October, some lenders have hit a speed bump.
“The challenge is all about process,” said Craig Crabtree, General Manager and SVP of Mortgage and Housing Services at Equifax. “We’re finding that for lenders to realize the benefits of Day 1 Certainty, they need to start with an understanding of their existing processes for validating the income, employment and assets of potential borrowers. That’s why we’ve come up with some best practices to help lenders get started with the Day 1 Certainty program and take full advantage of the simplifications and savings it can offer.”
Understand the program and potential benefits
Those best practices begin with an understanding of what Day 1 Certainty is. The program, which rolled out in October 2016, automates the process for income, employment and asset validations. It uses third-party data to reduce the need for borrowers to provide paper documentation and for lenders to collect it. Day 1 Certainty is an opt-in program for lenders. Lenders start by contracting with an eligible third-party data vendor, such as Equifax. Then lenders must register, or “opt-in,” with Fannie Mae. The program is designed to provide greater speed and simplicity for both lenders and borrowers.
Assess your current validation process
Before implementation, it is important that you understand how the current verification process works today and determine what that process will look like tomorrow. Important questions to ask yourself and your team:
- What are you doing today to validate income, employment and assets of potential borrowers?
- How do you acquire and process the necessary documents?
- What is your current cost to process a loan?
- How would that cost change under the Day 1 Certainty program?
Figuring out this entire process will require a team approach. At Equifax, we recommend that lenders bring together loan sales representatives, loan process owners, information technology staff, Equifax experts and others who can offer insights into the impact of changing from paper-based validation to full automation.
Best practices for Day 1 Certainty implementation
Once you complete your assessment and determine you are moving forward with the DU validation service for Day 1 Certainty, it is time to commit and develop a plan for successful execution. Some steps to consider including in your implementation process:
- Validate current-state process for verifications
- Review current-state process documents to baseline future-state.
- Leverage team approach to build future-state requirements
- Leverage subject matter experts to brainstorm solutions around a new verification process.
- Prioritize impact and/or effort for changes.
- Create executable action plan to enable process changes
- Create action plan with commitment dates and owners.
- Test and train
- Once you determine the new process for Day 1 Certainty, test several loans and document gaps and/or issues before you scale to the entire organization.
- Ensure you allow time for training of the new process for all impacted teams. Most likely implementation of new processes will change how staff members do their jobs. It is important that everyone knows what is changing, how it impacts their daily work and, ultimately, how to deliver an excellent borrower experience.
- Measure and refine
- Developing and measuring key performance indicators (KPIs) is critical to program success – it will allow you to benchmark how the new process is impacting cost and efficiency.
- Continue to improve the process as learnings become available – with any new program, it takes time to work out the kinks.
“At Equifax, we believe in the power of data automation, and we have an up-close view of what’s happening in the field with Day 1 Certainty,” Crabtree said. “We’re committed to helping lenders work through the setup so they can begin reaping the benefits.”
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