Opportunities in Collateral Risk Management

At Fannie Mae, Jacob Williamson is responsible for oversight and management of all end-to-end collateral capabilities. These duties include front-end collateral policy design, property valuations, collateral valuation process modernization, and real estate. In the real estate space, Williamson is responsible for various foreclosure and REO functions, including short sales, foreclosure sale strategy, eviction/redemption oversight, mortgage release/rental operations, property preservation/inspections, repairs, closing/title, HOA/tax management, REO sales, and REO auctions.

He is also responsible for performance management of the real estate agents, appraisers, and vendors. Williamson’s career with Fannie Mae stretches back nearly 14 years.

Williamson has served on the DS News Editorial Advisory Board (EAB) since 2019. As a new recurring feature in 2020, we’ll be bringing you conversations with our EAB leadership—the industry professionals who help shapethe topics, content, and direction of DS News.

What are your biggest takeaways and focuses as we leave 2019 behind and enter the new year?

“Opportunity” is the word I would use to describe where we are, both for Fannie Mae and as an industry. When you look at the available technology and data and how much things have advanced, we're really just scratching the surface on what we could do in the future. There are a couple of areas that I see as ripe with potential. One is around the valuation process and the technology that's being used to capture data, whether that's 3D scans or GIS data sources. All of this is becoming more available, and more in a state where we can use it, and that will be invaluable in understanding intimately what a property is worth and what it can sell for.

A second area of opportunity is with the digitization of the mortgage itself. Whether it’s electronically obtaining bank statements or examining credit attributes, all of that data is becoming more available in a way that we can really capitalize on it.

What priorities are you focused on as you plan your team’s goals?

I work in the collateral risk management area, so I’m all about the property and managing the risks associated with the real estate process. As a collateral risk management team, we have a few key objectives.

First, how do we do a better job of assessing risk with the collateral in the origination process? How do we improve quality and improve our overall risk evaluation increasing certainty around the value and the eligibility of the property? Continuously improving our risk management helps to support safety and soundness – that’s good for Fannie Mae and the industry.

Second, we want to continue to improve our own valuation process. At Fannie Mae, we utilize appraisers and real estate agents to help us assess the value and price of our properties whether it’s in consideration of a short sale offer, an REO that we own and manage directly, or to help us determine whether we feel comfortable with a foreclosure bid value or cancellation of mortgage insurance. We have a team of folks that work in these processes where their primary focus is to review and reconcile values, and our goal is to improve value accuracy while also minimizing process and product costs.

Lastly, we want to continue to improve our delinquent loan and REO decisioning. We want to improve how we determine appropriate strike prices and marketing decisions (e.g., whether to rehab or sell as is) all while maintaining our commitment to neighborhood stabilization and our preference to sell to owner occupants and first-time homebuyers.

Are there any technologies that you think hold particular potential as far as capturing and tracking property data?

I’m very excited about how attainable some of the technology solutions are becoming. 3D scans are a good example. When this technology was first introduced, it was an approximately $4,000 camera on a tripod. It took you maybe 30-60 minutes to complete a scan of a property. You had to leave the room while the camera completed its full 360 view, or you had to follow it around the tripod.

Now, you can buy spherical cameras (a flat device that captures 180 degrees on both sides of the device instantly so there is no rotation) for less than $500, and many industry players are starting to build those software capabilities directly into smartphones.

Technology is moving so quickly and I’m excited that it’s becoming more scalable, easier to use, and less expensive. Technology innovations not only help us better manage risk, but ultimately a more digital property valuation process will help everyone in the mortgage ecosystem improve its part of the process and give borrowers a great experience.

As technology advances, what are the challenges of integrating it into legacy systems, or making the decision to upgrade or replace those systems?

That's a great question, and one, quite frankly, that we struggle with. Do you invest in your old legacy technology and keep it up as much as you can? The exciting thing about the cloud and the use of APIs is that it changes the data environment in a way that you don't necessarily have to sync the old technology. As long as it's in a digital cloud version, you can access it anywhere and with any systems.

It's sometimes a challenge to get your old systems onto the cloud, and to modify your old systems in a way that you can hit it through APIs. But I think once you do that, this allows all these technology solutions to scale very quickly.

What are the milestones and accomplishments you’d like your team to have hit by this time next year?

I want us to be perceived as a team that focuses on process improvement, on the leading edge of technology, and as a partner to the many groups we work with to improve and innovate the mortgage and real estate processes. When we unfortunately have to acquire a property through foreclosure, I also want our team to be viewed as the best asset management company especially in how we preserve, rehab, and sell our properties, and protect and enhance their associated neighborhoods.

When I look at our Collateral Risk teams, these types of potential milestones and accomplishments are very motivating, and our teams are up to the challenge.