Any lender doing business the last couple of years knows it was a period of significant market movement, with extraordinarily high volumes of home sales and refinances. For many, it was difficult to keep up with the pace as the nation grappled with the effects of the coronavirus pandemic.

Although an intense period, Union Home Mortgage (UHM) – an Ohio-based independent mortgage banking company with over 150 branches across the U.S. – knew they’d get through it. “The market volatility and rate environment presented a number of risk challenges, in addition to operational obstacles,” says Ralph Mayo, vice president, Secondary Marketing at UHM.

"We decided a technology update would improve our settlement process efficiency, “he adds. “And allow us to scale."

Freddie Mac had recently launched its Cash Settlement Purchase Statement application programming interface (API). Cash Settlement Purchase Statement enables Freddie Mac’s Secondary Market Advisor (SMA) partners to help mutual clients get fast and easy access to loan settlement and contract-level data.

Vice Capital Markets – a leading mortgage hedge advisory firm and SMA partner with Freddie Mac since 2019 – was one of the first to integrate Cash Settlement Purchase Statement.

Vice Capital and UHM have worked together since 2012, so Troy Baars, president of Vice Capital, knew they’ve always been on the front line of innovation. “UHM is incredibly nimble and understands that technology adoption isn’t a choice, it’s a must,” says Troy. “Before we broadly released the API, we asked them to be a beta tester.”

Perfect Timing

“The suggestion came at the perfect time,” says Anna Edwards, secondary marketing analyst at UHM. “Maybe two days before our weekly meeting with Vice Capital, our funding team showed me their current process for getting the purchase advice into our loan origination system.

“They were copying data from a static PDF, pasting it into an Excel spreadsheet and then updating the loan origination system (LOS) for every loan we settled. It was manual, inefficient and subject to error.”

“The process took approximately 30 or 45 minutes to complete, twice each day,” adds Ralph. “That’s a significant amount of time, especially when you consider we were settling 400, 500 loans per day.”

The API appealed to UHM because they had already invested in digitizing the mortgage process. “We’re fully committed to identifying ways to improving origination through technology,” says Ralph.

For all parties, the goal of automation through the API was to find opportunities for efficiencies. Paramount to UHM was to scale and speed up end-to-end case management and eliminate errors and costly rework and manual data entry into the LOS.

Integrating the API

Freddie Mac launched its Developer Portal in 2021 to provide access to our API solutions and the information clients need so they can integrate with – and better leverage – those solutions.

Vice Capital’s software development team made the integration a top priority, starting by accessing the API code in Developer Portal to create the conduit between Vice Capital’s platform and Loan Selling Advisor®, Freddie Mac’s tool for integrating all secondary marketing functions.

“There was very little required to set up, so the integration to the API was completed in about six weeks,” Troy says. “Our team was able to go to Developer Portal, check the endpoint properties and get the related guidance documents we needed.”

Vice Capital saw the beta testing period as an opportunity for UHM to evaluate the API’s benefits against their business needs and priorities. For UHM’s part, they already had a technical team in place. “For an implementation like this, it was smooth and efficient,” says Ralph.

Shortening Reconciliation

Cash Settlement Purchase Statement updates Vice Capital data, along with Freddie Mac cash purchase advice data; then the commitment is automatically created in Loan Selling Advisor. The API enables UHM to:

  • Access the full contract and loan level detail of each loan committed on a particular date directly through the Vice Capital portal.
  • Quickly review and export purchase advice information.
  • Get immediate access to cash purchase statement data for the loans it sells to Freddie Mac.
  • Automatically pull in the data posted by Freddie Mac, including funding details and loan level credit fees, and update its LOS more quickly and accurately.

All of this leads to a simpler, faster and more accurate funding reconciliation process – with no more waiting to run reports through the LOS.

“We went from taking 30 to 45 minutes, twice a day, morning and afternoon, to five minutes, tops, for reconciliation,” says Anna. “That’s a savings of roughly an hour two times per day. It was a huge pickup for our funding – and for base capital as well.”

Indeed, the funding group is now able to reallocate their skills – and time – to other things, like loan characteristics, and examine whether something changed between lock-in and investor funding.

Additionally, the API has helped improve the interaction between the funding teams and UHM's accounting and finance groups. When they run models in the morning, they can get the numbers to the right people in about 10 minutes – in near real time.

The API integration helps UHM achieve greater data accuracy – and decrease risk – through rules-based decisions and calculations.

“If there’s a discrepancy in the funding statement, we can quickly identify the issue,” says Ralph. “The connection to this API enables us to be more accurate and timely.”

Anna agrees. “Being able to see what we're going to get for each loan sooner has been fantastic.”

Embracing Automation

“The vast majority of our scalability as a company has been a result of technology,” says Ralph. “In fact, over the past few years, we've been able to adjust up and down with our recruiting because of technology. A new generation is curious about innovation and willing to embrace the latest ideas.”

Regardless of growth or contraction, pricing continues to get more complicated. And innovation isn’t slowing down. Having the technology in place to automate elements of the reconciliation process, while ensuring data integrity, builds confidence despite market volatility.

Harnessing the Power of Partnership

Secondary marketing no longer relies just on a theoretical skill set; it also requires the practical and tactical skill set of technology. “There’s a need to develop these technologies that allow secondary folks to do more with less,” insists Troy.

That’s why it’s important that all parties – Freddie Mac, SMAs, lenders – continue to work together.

“We see this as a team effort,” says Cathy Stickelmaier, the Freddie Mac Account Executive dedicated to the Vice Capital relationship. “Our drive is to improve efficiency in the way data is communicated back to our lender clients. We constantly ask: ‘What can we provide?’ We’ll move quickly to update the API because we recognize the value in clients getting the data as fast as possible.”

Having a single point of contact at Freddie Mac who specializes in secondary marketing, with experience in pricing, hedging and loan trading, accelerates collaboration. “There’s great value in having a solid relationship with Freddie Mac to be able to roll out this type of technology advancement to our mutual clients,” Troy says.

While Vice Capital sees its ability to quickly develop an API integration as a competitive advantage, Troy acknowledges UHM’s integral role in helping develop and test. “We saw them as the benchmark of what our other large cash sellers would want,” he says. “The API is giving clients like UHM an edge in all parts of the mortgage lending process.”

“Any time we have an opportunity or challenge, we look to technology as a solution,” says Ralph. “How do we integrate this into our own process to make things easier? That's the mindset.

“It's an exciting time to be a lender.”

Get Started with APIs

Freddie Mac partners with Secondary Market Advisors (SMAs) like Vice Capital to provide an efficient, end-to-end experience for conducting business with us. If you’re a vendor interested in simplifying how your customers use technology to access pricing and improve reconciliation like Union Home did, learn more about working with Freddie Mac. If you’re a lender interested in saving time and gaining process efficiencies, learn more about working with Freddie Mac and our SMA partners.