Prabhakar Bhogaraju, Fannie Mae, Vice President, Digital Transformation Initiatives
Fannie Mae was a part of some of the earliest conversations about how the financial services ecosystem might be able to stand up a standards body to promote an interoperable and uniform API standard for consumer data sharing. Give us some of your memories from those early days.
Prabhakar Bhogaraju: We at Fannie Mae have long been champions of industry standards. We believe standardizing how data is managed and exchanged across industry participants, securely and with transparency to consumers, helps level the playing field for all players, fuels innovation and creates efficiencies. We are a strong sponsor supporter of MISMO, the Mortgage Industry Standards and Maintenance Organization, and had firsthand experience in shaping industry standards and the value they bring to all market participants.
With our Day 1 Certainty® initiative, we were first to bring digital validation and certification of borrower income, employment, and assets to the mortgage market. Through this process we realized that there is a lot of variability in how the mortgage and financial services industries have been capturing borrower information on mortgage loan applications.
We saw an opportunity to bring together the mortgage business with other financial institutions to help drive standardization. We joined hands along with a few other industry leaders and got this started as one of the early founding members of FDX.
At first, the organization didn’t even have a name, so we called ourselves Initiative X to get things going and set out to build momentum. It’s very exciting to see the organization’s progress and the leadership our broad-based membership is bringing to this important work.
What value proposition of FDX was most enticing to Fannie Mae in those early discussions and how have you seen that value come to fruition in FDX to date?
Prabhakar Bhogaraju: Our mortgage industry continues to be bogged down with paper-based manual processing. Our innovation teams at Fannie Mae have been working on experiments and pilots to help explore digital methods of mortgage loan processing and driving more automation – saving processing time and costs.
Automation of mortgage loan processing gives consumers the digital experiences they have come to expect, while giving our lenders operational efficiencies and improvements in loan data quality.
Given Fannie Mae’s position in the secondary market, we are looking for solutions that are broadly applicable across the housing industry and that connect the mortgage business to the broader financial system. FDX’s mission of broad stakeholder inclusion, and its emphasis on transparency and security, are particularly important for us.
Enabling safe and secure methods of gathering critical consumer financial data, including eliminating the challenges of screen scraping, is hugely important to the financial services industry.
How will the adoption and broad implementation of a common, interoperable API standard for financial data sharing benefit Fannie Mae?
Prabhakar Bhogaraju: The primary benefit is for our customers: mortgage lenders. Having an interoperable data exchange standard (API) for consumer financial data makes their job easier in processing mortgage loan applications with higher quality and lower cycle time.
Borrowers – our customers’ customers – also benefit by way of a more transparent and streamlined digital experience. No one likes to go dig out past years’ tax statements, or prior month pay stubs, and fax them over to get their loans evaluated. The ability to electronically access borrower asset data – permissioned and with consent ¬– helps speed up the processing time and improve the quality of loan applications.
Last, but not the least, having an interoperable standard allows us to innovate and more effectively manage risk, which in turn enables us to offer certainty to our lenders – certainty that a loan originated with electronic validation of borrower assets, income/tax etc., is something Fannie Mae will stand behind and eliminate potential for buy-backs and associated uncertainty for our lenders down the road.
What notable developments has Fannie Mae noticed in the user-permissioned data sharing ecosystem this year?
Prabhakar Bhogaraju: There is broad awareness of the need for standardization of consumer financial data and the exchange process – with transparency and security as primary guiding principles. We are pleasantly surprised how quickly this work has built momentum, and how collaborative all of the industry participants have been in coming together for a common good.
Tell us about how Fannie Mae is implementing use of the FDX API today.
Prabhakar Bhogaraju: We have a couple of workstreams underway that are looking at leveraging the FDX API for our current validation of assets business process. We are participating in and influencing the development of standards to meet our mortgage lending use-cases and our security requirements.
In addition, we are closely following the strong developments in the tax data model being developed in the API specifications and will be looking to explore leveraging that data model and API down the road. This solution would solve a long-standing pain point with mortgage lenders – the manual calculation of income for non-salaried borrowers.
Finally, on a personal note, and for a little fun, what concert or live music event do you wish you could have attended in person?
Prabhakar Bhogaraju: Queen Live @ Wembley of course! I was just finishing high school, and an overseas trip for a rock and roll concert just didn’t attract sponsorship in my household back then. I did get unlimited replay dibs on the family TV/VCR though!