GSE UPDATE AND MERS eREGISTRY

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GSE UPDATE AND MERS eREGISTRY

• MBAs Legal Issues In Mortgage Technology
  Conference
• San Diego, CaliforniaDecember 2, 2005

James A. Newell Associate General Counsel Freddie
Mac James_Newell_at_freddiemac.com
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Building Blocks of Freddie Mac Technology
Industry eMortgage Vision
Servicing System
Default Management System

• Loan
• Prospector
• Selling
• System

Web-based Platform

Data Integrity
Data Standards
Data Security
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Value Proposition

• Freddie Mac Or Other Investor
• Increased speed of funding with eNote
• Improved data accuracy and quality
• Reduced loan delivery cost (handling storage)
• Elimination of back-office processing (automated
  note certification)
• Potential prevention of predatory lending (HUD-1
  Smart Docs)
• Improved fraud detection and examination

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Value Proposition

• Lenders and Other Industry Players
• Faster securitization Warehouse line cost
  reduced for lender
• Velocity lending Elimination of note
  endorsements
• Shorter duration gap and interest rate risk
• Facilitates product bundling
• Facilitates data storage and retrieval
• Automates servicing loan setup

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Our Guiding Philosophy

• The eMortgage solution belongs to our customers
  who can control
• The vendor selection
• The functionality of the solution
• The investor(s) to which it connects
• The user experience of their internal and
  external customers as they interact with the
  solution.
• Freddie Mac will provide the connections and
  functionality that are inherent to us purchasing
  the loan in the most efficient way.
• Freddie Mac believes in the value of open
  standards.

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Open Standards
Lender
Freddie Mac
eRecording
Servicing
Service Ordering MI Credit Valuation Flood Haza
rd Title
AUS
eDocs
Electronic Document / Electronic Note
Infrastructure
Delivery
QC
Non Performing QC
Fraud
Collateral Evaluation
Other
eClosing
QC
eDoc Prep
eOrigination

eSignatures
eVault
MISMO XML Data Transactions And eDocs
Title / Closing
Buyer / Sller
eNote Registration Transfer Messages

• Freddie Mac Role
• Publish policies
• Publish specifications
• Build integration
• Supply call features (e.g. Underwriting decision,
  fraud tools, delivery purchase edits, etc)
• Test, verify and support integration processes

Key
eNote Registry
Freddie Mac Proprietary
Best-in-class technology vendor or lender
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Supporting Open Standards

• Contributing to MISMO eMortgage standards
  initiatives including data, SMART Document,
  eClosing Legal WG.
• Participating in continuing development of MERS
  eRegistry
• Supporting implementation of SPeRS deliverables.
• Participating member of the PRIA.

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Implementation Plan

• Collaborate with technology vendors and our
  customers to create integrated solutions for
  streamline electronic document and data flow.
• Leverage the infrastructure of our new web-based
  selling system and best-in-class electronic
  document and electronic mortgage solutions.
• Incremental approach to deploying new processes
  to minimize disruption.

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Where We Are Now

• eMortgage Specifications Guide (EOY 2005)
• Sets forth requirements and guidance for Sellers
  that wish to create or manage mortgage loans
  using Electronic Records and Electronic
  Signatures.
• Guidelines for
• Acceptable signatures
• Creating and using natively electronic documents
• Storing and sharing documents electronically
• Creating, delivering and managing electronic
  notes and other collateral documents
• Incorporated uniform language in the eNote in
  conjunction with Fannie Mae

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Summary

• To enable Freddie Mac and our customers to reduce
  loan costs through the use of widely accepted
  electronic mortgage documents and data.
• To take thoughtful approach, inclusive of all
  parties, relevant to our mission, and makes good
  business sense.
• Facilitate the mortgage industrys adoption of
  eMortgage capability through leadership in
  industry standards organizations.