David W. Glenn
Vice Chairman and President
Freddie Mac

MBA Secondary
Orlando, FL
May 7, 2001

Thank you, Andy [Woodward], and good morning to each of you. It's my pleasure to join you again for this great conference. I welcome this opportunity to see familiar faces and to make some new friends.

I'm also delighted to join Andy, Jamie [Gorelick] and George [Anderson] for this morning's session.

Andy, thanks for announcing earlier today, Path to Diversity-a new joint effort by the MBA and Freddie Mac. We're enthusiastic about this new program. It will increase the pool of qualified minorities in real estate finance and encourage greater cultural diversity in our industry. And we're excited to be working with the MBA on this program.

George, on behalf of Freddie Mac, I'd like to congratulate you on the strong leadership you've provided to Ginnie Mae. We've worked with you for years and have thoroughly enjoyed the opportunity. I admire the strength, calmness and dignity that you have brought to your role as acting president.

Jamie, we also welcome Fannie Mae's support for industry standards. Freddie Mac has consistently led these collaborative efforts, first in the MBA's Technology Work Groups, and now in MISMO. We first announced our commitment to MISMO e-commerce standards in March 2000. And we remain firmly committed to standards that benefit the entire industry.

Today, I want to talk about making the mortgage origination process faster, easier and more flexible for you. The current refi market is a terrific example of how speed, simplicity and flexibility can help you meet the needs of more borrowers.

Freddie Mac projects loan originations of $1.5 trillion this year, and possibly higher if the current refi wave sustains momentum. And we expect refis to make up more than half of the market.

To help you retain customers in this fast-paced environment, Freddie Mac has introduced a number of refi changes. We've raised the maximum LTV for streamlined refis to 95 percent, and we've eliminated the seasoning requirement on Freddie Mac-owned streamlined refis. Using Loan Prospector, you can now evaluate refi mortgages with our new and revised policies, approve more loans faster and serve more borrowers.

To help you reach even more borrowers, we've also made it easier to originate loans for leasehold estates and manufactured homes, which account for nearly one-third of housing starts. And we've introduced a unique program that enables Muslims to purchase their own homes in 21 states, while keeping within Islamic religious law.

By broadening your access to new products like these, we're giving you the opportunity to serve more borrowers and diverse communities.

We're also working hard to help you keep pace with today's rapid change.

In our industry, market change comes swiftly, and technological progress has little patience for outdated and costly processes. If you're not preparing for the next step, you may be falling a step behind.

So, in addition to new products, Freddie Mac is also committed to providing you with competitive executions and customer-focused solutions that are faster, easier and more flexible. We will work with you every step of the way to forge a partnership that makes you successful.

That commitment holds true whether you're a small, medium or large lender. And it remains firm whether you originate loans in the retail, wholesale or online channel…or in all three.

Regardless of your business model or market share, our job remains the same. We provide a reliable, low-cost source of funding that you can deliver as cheaply and efficiently as possible to every potential homebuyer.

www.loanprospector.com

Of all of the innovations Freddie Mac has introduced to reduce costs and increase efficiencies, none has had a greater impact than Loan Prospector.

From the first mortgage evaluated in 1995 to the 10 millionth loan processed earlier this year, our automated underwriting service has streamlined origination processes and lowered costs. By this time next year, Loan Prospector will have scored an additional 10 million loans, which demonstrates how widely the industry is using this powerful tool.

Two years ago, brokers and wholesalers began using our web-based version for fast loan approvals at the point of sale. Market adoption was so successful that Mortgage Technology Magazine named LP on the Internet the "Best Strategic Use of Technology in 1999."

And last month, we added a no-appraisal option to Loan Prospector that will speed your loan process and save many of your customers the cost of a traditional appraisal. In fact, for qualifying loans scored by Loan Prospector, this option will enable virtually instant collateral approvals. As a result, you and your borrowers could save up to 80 percent of the appraisal costs for eligible mortgages.

By reducing costs and streamlining processes, Loan Prospector has dramatically changed mortgage lending in only five years' time. Now that automated underwriting has become the industry standard for approving loans, the time has come to take the next big step.

Today, I'm announcing that Freddie Mac is expanding our suite of Loan Prospector Tools to help you originate loans more efficiently every step of the way. We'll distribute these tools to you through a new website, loanprospector.com, that will enable the most streamlined mortgage processes possible from beginning to end.

Initially this new site, which goes live this summer, will give you access to the web-based, credit- and collateral-evaluation tools that currently make up LP on the Internet. During the next year, Freddie Mac will add new web-based tools that include point-of-sale pricing, rate locking, secondary-market funding and investor loan delivery. All of these tools will be accessible through loanprospector.com.

By integrating pricing and fulfillment processes with loan approvals on a single, web-based platform, we're leveraging the power of e-commerce. The result will be the most efficient distribution vehicle for all of your secondary market needs.

For example, retail loan officers and mortgage brokers will gain easier access to a lender's pricing, so they can help your borrowers respond more quickly to capital market changes.

These online tools will be readily adaptable for retail, wholesale and online originations, yet flexible enough to meet your business needs and strategies as they evolve. From our a-la-carte platform, you can choose one or more of these LP Tools based on the options that work best for you.

E-commerce is changing the mortgage industry and creating new opportunities for lenders of all sizes. Our suite of tools can streamline your processes and lower your operating costs, no matter where you are in the e-commerce spectrum.

Ultimately, they further Freddie Mac's commitment to help you expand homeownership, and to reduce loan origination costs for you and your customers.

Leveraging Technology

Time and again, mortgage technology has proven itself to be one of the most powerful ways to open doors and to lower origination costs.

With our recent purchase of Tuttle Decisions Systems technologies, which Freddie Mac helped to develop, we're using leading-edge tools to make the link between the primary and secondary markets even better.

We'll make these capabilities widely available to enable faster, easier and more flexible processes for all of our customers. I think it's fair to say that virtually everyone here today would benefit from spending less time and money on their origination processes.

Electronic mortgages represent similar opportunities to reduce the time and costs associated with loan processing, administration and storage. From our collaborative efforts with lenders, the MBA and other industry parties, Freddie Mac has received enthusiastic feedback on preliminary specifications. Ultimately, these collaborative efforts will help shape our electronic mortgage requirements.

Electronic commerce is also creating new opportunities for many of our other existing capabilities. At Freddie Mac, we're upgrading our own systems to make doing business with us even faster, easier and more flexible for you. Working with lenders, servicers, vendors and others, we're adopting open standards and using e-commerce to offer you more options.

Before year-end, we will have completely redone and modernized our loan delivery system to improve the efficiency and execution of our Cash window.

When all of our work is complete, we'll be able to create new mortgage products for you in a fraction of the time it takes today. In addition, we'll have upgraded our commitment, delivery and servicing processes to readily meet the customized needs of all lenders…large and small.

Each of these technology initiatives will help you conduct your business more efficiently, and simplify originations for you and your borrowers. Think for a minute, though, about the collective impact of these innovations.

We're leveraging the technologies available to us so that you can assess credit and collateral risks instantly, from anywhere your laptop can go. We're developing flexible capabilities that will let you quickly and easily customize a borrower's mortgage to his or her specific needs and credit profile. That same day, you would perform all of the required processing functions online and close the loan with a digital signature.

We're working toward a future where you can originate, fund and sell us a loan in a span of hours, rather than days. That's our vision for the mortgage industry, and we'll work with you every step of the way to help you succeed today…and in the future.

Conclusion

Faster, easier and more flexible-that's Freddie Mac's commitment to you.

We'll remain relentless in our pursuit of innovative business solutions and web-based technologies that enable you to originate more loans efficiently. We'll continue delivering secondary-market tools that benefit all lenders, regardless of your size or sourcing channels. And we'll consistently provide you with a reliable, low-cost source of funding that you can deliver as cheaply and efficiently as possible to every potential homebuyer.

We are your link to the world's capital markets-your success is inseparable from our success. So we're working hard every step of the way to forge a business partnership that makes you successful.

I invite you to visit our Gold Club and our booth in the exhibit hall to learn more about loanprospector.com and other Freddie Mac solutions to help you succeed. Thank you.