Freddie Mac, others partner with an expanding ICE

Intercontinental Exchange is leveraging its recent acquisition of Black Knight in a string of new business relationships, including a partnership with Freddie Mac on automation aimed at ensuring loan quality. 

ICE also announced new customer relationships with Fifth Third Bank and Lennar Mortgage at its annual mortgage conference this week.

Lennar is adding Black Knight's servicing software to a technology lineup that already includes ICE's loan origination system, Encompass. Fifth Third is adding both the company's new MSP servicing technology and the loan production platform. 

The announcements exemplify the new attractions ICE holds given that its technology offerings now include some of the widest-used origination and servicing automation in the mortgage business, with the exception of holdings Black Knight divested pre-acquisition.

"At Fifth Third, we're working to digitize the overall homebuying experience, giving our customers control, choice and transparency along the journey," said Jay Plum, executive vice president and head of the bank's mortgage division, in a press release.

"ICE's approach to modernizing housing finance with integrated technology and seamless data sharing aligned perfectly with what we're seeking to accomplish for our customers," he added.

Meanwhile, Lennar's partnership in particular highlights a growing need for systems that bridge the point at which servicing and origination overlap in retention or the period just before a sale.

"We need to be able to move loans quickly and seamlessly from origination into servicing, and then on to their financial destination just as easily," Lennar Mortgage CEO Laura Escobar said in a press release. "ICE's mission to digitize and streamline all aspects of the housing finance lifecycle aligns perfectly with our goal."

The loan sale functions that the Freddie Mac partnership primarily focuses on are digital validations of data, which the government-sponsored enterprise has found to reduce defect rates to 2.3-8.5% compared to 9.6% for mortgages processed without them.

Freddie describes the collaboration with ICE as one that will "help lenders quickly and efficiently underwrite mortgage loans starting at the point of sale."

The enterprise's loan quality initiative involves automation used to verify borrowers' assets, income and employment eligible for representation and warranty relief. The partnership also extends to technology used for cash-flow or rental-payment analysis used in underwriting. Freddie often accommodates these types of analyses in conjunction with private vendors like ICE.

In answer to what may continue to be a growing need for appraisal compliance given Consumer Financial Protection Bureau Director Rohit Chopra's recent skepticism of current rules, ICE also announced new valuation tools at its conference.

One tool, Validate ROV, was designed to handle the reconsideration of value process by allowing a consumer to use a mobile device to take geofenced, time-stamped property photos demonstrating why an appraisal might be flawed. The technology is a follow-on to the Validate software that Black Knight demonstrated at the 2023 Digital Mortgage Conference, which analyzes photos to deliver reports on a property's condition and estimated value.

The other tool, Valuation Selector, applies an automated analysis to public data sources, listing and assessor information. It then recommends which of the following is optional: automated valuation model, AVM with inspection, desktop exterior, desktop interior or full appraisal.