Fannie Mae and Freddie Mac have entered a new phase in the Uniform Closing Dataset (UCD) critical edit process. This development requires lenders to address "fatal data points" prior to "loan delivery". The UCD acts as a channel for lenders to transmit "mortgage loan details" to the Government-Sponsored Enterprises (GSEs).
This follows the third phase of the edits, which was split in April 2023 and initially slated for May, granting lenders additional time to handle "high-firing phase three edits". This phase includes loan costs, other costs, total closing costs, and "lender credits".
The GSEs have been implementing a multi-year transition since August 2020, with a focus on enhancing "data quality and consistency" for "single-family loans". Part of this process involves transitioning certain "UCD collection edits" from 'warning' status to 'critical/fatal'.
Looking forward, the GSEs are preparing for the fourth phase of the UCD critical edits. The "forthcoming UCD Specification update", anticipated in 2024, is expected to feature "revised requirements" for these critical edits. This ongoing initiative reflects Fannie Mae and Freddie Mac's commitment to improving mortgage loan data quality and consistency across the lending industry.
InvestingPro Insights
As Fannie Mae (FNMA (ST:FNMA)) and Freddie Mac (FMCC (OTC:FMCC)) enter a new phase in their Uniform Closing Dataset (UCD) critical edit process, let's delve into some key InvestingPro insights.
FNMA has been noted for its high earnings quality, with free cash flow exceeding net income, which is a positive sign of its financial health. It has also seen a high return over the last year, indicating strong performance. However, it's worth noting that FNMA's stock generally trades with high price volatility, which may be a consideration for risk-averse investors.
On the other hand, FMCC is expected to see growth in net income this year, which could signal a positive outlook. It has also demonstrated strong returns over the last month and three months, suggesting an upward momentum in its stock performance. Similar to FNMA, FMCC's stock price movements can be quite volatile.
These insights are just a snapshot of the wealth of data available. InvestingPro offers numerous additional tips for both FNMA and FMCC, providing a comprehensive analysis to investors.
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