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Riding the Wave of Innovation

In his role as SVP, Head of Digital Products at Fannie Mae, Henry Cason is responsible for the design, development, and launch of a digital suite of products and services across single-family residential mortgage loan life cycle. He is also responsible for fostering the integration of Fannie Mae’s technology and business infrastructure to help Fannie’s customers grow and create value in the marketplace. The Head of Digital Products integrates product development functions across Fannie Mae’s Single-Family business in mortgage origination and underwriting, loan acquisitions, conduit and capital markets business, as well as servicing and asset management portfolios. He leads a team of officers and works with senior leaders in credit policy, strategy, insights, and marketing, as well as Fannie’s customer delivery teams.

Cason spoke exclusively with DS News about riding the wave of technological innovation, Fannie Mae’s testing and development processes, and what emergent technologies have the potential to reshape the mortgage and housing landscape.

As Head of Digital Products at Fannie Mae, how do you and your team encourage technological innovation?

In our Single-Family division, we build and deploy technology that is tailored to our customers and is also used internally by our firm. That technology follows a mortgage’s lifecycle: from the front end of our business—how do we underwrite loans?—all the way through to delivery of those loans into Fannie Mae. The technology we build is also used by capital markets investors and helps ensure liquidity is available in the marketplace. On the back end of our business, technological innovation shapes how those mortgages are serviced, whether that's performing or non-performing loans. My role is one of taking an end-to-end view across the lifecycle and understanding how we can introduce digital functionality to the marketplace to make it easier for our customers to do business with us. We're already starting to see the early benefits of our efforts.

What are some of the projects you are working on right now?

The first one is what we call our Single Source Validation (SSV) project, which is building upon our Day 1 Certainty program. Just to give you an overview, we rolled out Day 1 Certainty a year and a half ago. It offers the ability to access source data on employment income and asset verification, and use that data within the Desktop Underwriter (DU) process. If you had gotten approved through DU by using that data directly from the source, then we were able to offer relief on certain reps and warrants for our customers to provide certainty on that loan.

A year after we first introduced Day 1 Certainty, we rolled out an enhancement to that program where we're able to now calculate not only assets but income and employment from asset data. I'm excited about that because it's a different way of thinking in the industry. It lowers costs in how you go about validating these sources of data. As we get through our pilot and into production, it will become an innovative game changer for us and our lender customers.

SSV has also created very significant process efficiencies. If we can get asset data directly from a bank through a service provider and use that asset data in DU, that's a much safer, much more sound process than asking a borrower to bring in three months' worth of paper bank statements. It's saving time on the back and forth of trying to get the bank statements, trying to get the right bank statements, and then interpreting the bank statements. Going directly to the source and using that data has created a significant amount of process efficiency for our customers.

The second project is a bit higher level. Through our API (automated programming interface) platform, we're starting to expose pieces of Fannie Mae data to target specific process pain points for our lender customers. It's exciting because, through our APIs, our customers can access pieces of our data more quickly. It's now easier for us to integrate into their current technology and manage micro pieces of data from Fannie Mae and inject it into a process point that allows them to make faster decisions.

As we continue to innovate, we're spending lots of time with our customers, helping them not only integrate the technology or the functionality but also working with them on ways they can change their business processes to take advantage of the value proposition.

Can you tell me how your development and testing processes work?

First and foremost, we put the customer at the center of everything we do at Fannie Mae. Secondly, we are very mature in our agile engineering practices. We have been operating from an agile perspective at the firm for the last four years. We have intersected the customer-centric mindset with our agile development process. That translates directly into how we build and roll out products. We’ve put a digital operating model in place at the firm to spur innovation and deliver faster.

Our operating model has three main tenets: empowerment, collaboration, and test and learn.

We now have our agile teams—we call them squads. They consist of about seven to nine people, and they're empowered to solve a problem, collaborate, and test and learn with customers. It could be a large problem that could take two years to solve, or it could be a small problem that takes three months.

We are customer-insight driven, meaning we collect insights from our customers before we start building. From those insights, we're able to develop a hypothesis. Then, we pull our customers into those discussions, and we validate those hypotheses through testing and learning. This is a big change for us because in the past we would build what we thought our customers wanted, and get something into production. Then there would be, in some cases, little to no value, because we didn't start innovating with the customer at the beginning of the process. A part of this operating model is to pull a series of customers into that problem-solving process so you get their point of view and you put yourself in their shoes. We co-create with them.

Being agile and working in what we call two-week sprints, we're always able to have customers looking at what we're building. It could be wireframes; it could be prototypes; it could be working software. But every two weeks, we get some customer input on what we're doing. That allows us to pivot quickly. That's part of our agile journey, and that's pulling our customer into our agile journey.

Lastly, for some of our innovations, we do a series of test-and-learn pilots where we're able to run, concurrent, a number of concepts and get that feedback from our customers as they're using it. When we call something a pilot, it's a piece of code that is in production that customers use. Did it add the value that we think it did? We're very metrics driven now, so any pilot we enter, we've got a customer hypothesis and a series of metrics we use to manage and measure value.

What are some of the technologies that you think have the potential to reshape the industry?

The move to the cloud. You get a different perspective on resilience and security because all of that's built in. Cloud, for us, has been transformative. It also makes you build things differently. You don't build these big applications anymore. You build smaller, which is important.  

APIs have been, and will continue to be, transformative for the industry because of their low-cost. It's allowing not just Fannie Mae, but all sorts of entities in mortgage finance to exchange pieces of data real-time and then insert it into business processes.

We also think Blockchain and artificial intelligence have a lot of applications in mortgage finance. Those are the big emerging tech areas that I see changing mortgage finance over the next 24 to 36 months.  

What is something that you wish more people understood about your job?

When you read my title, “Head of Digital Products,” most people gravitate to, "Oh, you're building a bunch of cool tech." Well, we are building a bunch of cool tech, but it's tech that's adding value to our customers. My job is really about transformation and culture change inside the walls of Fannie Mae and the mortgage finance transformation outside of the walls of Fannie Mae.

We're doing it under the digital umbrella, but it's a way we can pivot and engage our customers differently. By engaging those customers differently, we're able to bring different types of value to the marketplace.

About Author: David Wharton

David Wharton, Editor-in-Chief at the Five Star Institute, is a graduate of the University of Texas at Arlington, where he received his B.A. in English and minored in Journalism. Wharton has nearly 20 years' experience in journalism and previously worked at Thomson Reuters, a multinational mass media and information firm, as Associate Content Editor, focusing on producing media content related to tax and accounting principles and government rules and regulations for accounting professionals. Wharton has an extensive and diversified portfolio of freelance material, with published contributions in both online and print media publications. He can be reached at David.Wharton@thefivestar.com.

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