- 2 days ago
In this Power House conversation, Kevin Kauffman shares how Freddie Mac is working alongside lenders to meet rising costs and a changing housing market. He describes a partnership built on listening, data, and practical support—from streamlining lending processes to helping consumers find down payment assistance.
Related to the episode:
Zeb Lowe’s LinkedIn
https://www.linkedin.com/in/zebulon-lowe-a02353a4/
Kevin Kauffman's LinkedIn
https://www.linkedin.com/in/kauffmankevin/
Freddie Mac
https://www.freddiemac.com/
Freddie Mac News & Insights
https://sf.freddiemac.com/news-insights
Ready to become a Freddie Mac Seller/Servicer?
https://sf.freddiemac.com/working-with-us/become-a-seller-servicer/overview
Want more from Zeb? Don’t forget to subscribe to LendingLife.
The Power House podcast brings the biggest names in housing to answer hard-hitting questions about industry trends, operational and growth strategy, and leadership. Join HousingWire’s Zeb Lowe every Thursday morning for candid conversations with industry leaders to learn how they’re differentiating themselves from the competition. Hosted and produced by the HousingWire Content Studio.
Related to the episode:
Zeb Lowe’s LinkedIn
https://www.linkedin.com/in/zebulon-lowe-a02353a4/
Kevin Kauffman's LinkedIn
https://www.linkedin.com/in/kauffmankevin/
Freddie Mac
https://www.freddiemac.com/
Freddie Mac News & Insights
https://sf.freddiemac.com/news-insights
Ready to become a Freddie Mac Seller/Servicer?
https://sf.freddiemac.com/working-with-us/become-a-seller-servicer/overview
Want more from Zeb? Don’t forget to subscribe to LendingLife.
The Power House podcast brings the biggest names in housing to answer hard-hitting questions about industry trends, operational and growth strategy, and leadership. Join HousingWire’s Zeb Lowe every Thursday morning for candid conversations with industry leaders to learn how they’re differentiating themselves from the competition. Hosted and produced by the HousingWire Content Studio.
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NewsTranscript
00:00Welcome to a special sponsored episode of Powerhouse.
00:03Rising costs, tight supply, technology moving faster than anybody can implement,
00:09and a compliance environment that never sits still.
00:12That's the job right now.
00:14Today's conversation is about who's standing next to lenders while they work through it.
00:19My guest is Kevin Kaufman, Senior Vice President of Seller Engagement at Freddie Mac.
00:24We get into what it looks like when someone works alongside a lender
00:28instead of just handing down requirements.
00:41All right, Kevin, thank you for joining me.
00:43Thanks for having me.
00:45Yes, sir.
00:46I know we've got quite a bit to talk about,
00:49but before we dive into the specifics of our conversation,
00:53I was curious, can you tell me a bit about yourself?
00:55How long have you been at Freddie Mac and in this role, and what does that role imply?
01:01Yeah, so I've been at Freddie Mac for eight years.
01:07I've been in the mortgage industry north of 25.
01:10I think from my side, I've been lucky enough to have a seat in almost every potential role in this
01:18industry,
01:19from originations to loss mitigation to door-to-door collections back when we were allowed to do those things.
01:24So my responsibility here at Freddie Mac is that I have responsibility of all of industry engagement.
01:33So think of all the sellers, which are all the lenders who do business and sell loans to Freddie Mac,
01:38all the third-party partnerships of the technology ecosystem that lenders use,
01:43the technology for the LOSs, the POS, the dock providers, the appraisers,
01:48to all of the things in between the entire ecosystem.
01:51We have teams of individuals who work with those companies.
01:55So I also have responsibility over our affordable housing initiatives and goals.
02:02And so those things that are regulatory required, those things that are mandated,
02:06all associated with affordable lending and the goals we have around that,
02:10inclusive of marketing communications, our call center,
02:14and a few other aspects of our business here at Freddie Mac.
02:17Did I hear you right?
02:18You said you did door-to-door collections?
02:21I did door-to-door collections.
02:23It was interesting.
02:24Back at a time during the financial company booms that were out there,
02:30there were several of them.
02:31You originated the loan.
02:33You processed the loan.
02:34You underwrote the loan.
02:35You closed the loan.
02:35And if that loan went, the link went, you were lucky enough to do the loss mitigation process,
02:41including several times showing up, you know, New Year's Eve,
02:45showing up to different institutions and asking for checks.
02:48And it was very interesting.
02:49But it really helped put things in perspective of the entire ecosystem and how the process flows.
02:57I got to tell you, it's like, you know, real early on in my career,
03:01but it was one of those jobs that just sits with you forever because you do have to sit
03:06and understand every aspect of our entire business.
03:09Right.
03:10Yeah, I've never met anyone that actually has done that.
03:13So I would imagine that would be one.
03:15I'm sure you've got quite a few stories that I'd like to hear.
03:18There are stories.
03:19We can talk about them at a different time.
03:21Let's set the stage with an overview of the current environment, which, you know,
03:28people are trying to survive.
03:29And then we can dive into the specifics.
03:31We've got right now, from a lender perspective, lenders navigating the cost pressures.
03:37There's supply, limited supply, changing technology, rapidly changing technology,
03:42and evolving compliance landscape.
03:47How do you see Freddie Mac's role as a helper or helping the industry move through this?
03:55To me, this is more of a once in an industry type change that we're going through.
04:03It's a great question.
04:04I think the way that you framed it is super important.
04:07And I don't think anyone feels it more than those companies who are under the stress,
04:11besides the American consumer.
04:13And so I talk a lot about why I love working at Freddie Mac and what it means to me
04:19is because
04:21I think in the end, like our impact, all of us, you, housing wire, loan officer listening,
04:28processor, real estate agent, everybody involved.
04:31I think it's so easy to think about your role in its narrow focus that we believe that it is,
04:39as opposed to the broad impact that collectively we all make on overall society.
04:46And if you back that out, what that means is, is the impact that we can make over the U
04:51.S.
04:51housing market, we all have to contribute to do so.
04:55U.S.
04:56housing market has the largest, one of the largest impacts on the U.S.
05:00economy, which has the largest impact on the world economy, which has the biggest impact
05:05on society as we know it.
05:07And so when you think about the core things that are in anyone's life, it's food, water,
05:13shelter, right?
05:14And so we are in that shelter aspect and it really matters.
05:17And it's really personal to me.
05:19And so why I actually love what we do here is because our ability to influence the ecosystem
05:28in a way that is truly unique.
05:31And what I mean by that is that Freddie Mac, we get a chance to work with.
05:36And part of the reason why I love it so much is I can pick up the phone and call
05:41most anybody
05:42in the entire industry.
05:43And I think we have a chance to have a real discussion about things that are impactful
05:47to the American consumer, because that's what we're all focused on.
05:51And so as costs have risen, there have been multiple factors.
05:54So as you identified, we're in a very unique time.
05:57We've been in a lot of unique times throughout this industry over the years.
06:01And interest rates have been extremely high historically.
06:05And that has created pressure on home prices over the years.
06:09And I think what makes this a unique time is even as we saw the financial crisis in 2007,
06:148, 9 and into that process was home prices continued to kind of maintain in the majority of
06:21the places, but they also shrunk when interest rates went up.
06:24And I think we're in a place now where home is the largest investment an American consumer
06:30makes.
06:31And so how you bring that forward, it wasn't always the case, but now you want that asset
06:36to retain its value as much as possible.
06:40And that has an impact over the entire ecosystem.
06:43And so the way that I think about this is our ability to contribute is it starts first and
06:49foremost.
06:50We're here to provide liquidity, stability, and affordability to the marketplace in a safe
06:55and sound manner.
06:56Our role is to provide that stability by providing that liquidity and coming up with ways to promote
07:03affordable lending products back to the American consumers.
07:06And so when I think about folks trying to survive, our role can't just be transactional and providing
07:13a price.
07:14Our role has to be we have to be a true partner to every seller servicer who wants to do
07:19business
07:20with Freddie Mac, with our lens being that we care about you and how you deliver as a lender
07:26or a servicer to the borrowers of America in order to reduce those prices.
07:32And so we have a lot of different ways that we can help do that through beyond product, but also
07:37how we
07:38engage with the industry.
07:39So, you know, I think we're in the back end of 2026, which is crazy.
07:45I think what I heard a couple of years ago as lenders were talking about, it was survive to 25.
07:52Right.
07:53So so so that that phrase was coined.
07:55I think people felt really good.
07:57I think the industry, even as far as the first quarter of this year, folks still felt pretty
08:03good.
08:03And I think once we got the MBA secondary in May, folks started to feel a little bit more
08:07pressure.
08:07Our job is to find creative ways that can help unlock that affordability component, ways that
08:14we can help you think about your business to reduce steps to therefore reduce cost.
08:18And we do that in a lot of really, really good ways.
08:21Yeah, I can't remember, I might have been on a previous phone call with with your team,
08:28but the phrase strategic housing ally was brought up several times.
08:33And I'm curious to know if you can unpack.
08:37I mean, I think, you know, obviously the intuition says that it's in it's in the phrase, it's in
08:42the title there.
08:43But can you unpack what that what that means in practical terms and how that spills over
08:47to your customers?
08:48Yeah, so it's a it's a great question.
08:53And, you know, you don't like to give all your secrets away, but but it starts with with
08:57really caring about the business of those partners you do business with.
09:02And so we've developed a mindset internally at Freddie Mac that puts us in a position to
09:10care about every aspect of your business.
09:12And so historically, you think about it and you say Freddie Mac is a secondary market player
09:16and they're here to consume loans and then trade those on the on the secondary market.
09:21But but our goal strategically for years has been that we have to be innovative about the
09:27products we bring to market.
09:29Think about the consumers our originators do business with when we create those products
09:34and think about the technology ecosystem that they consume our tools, our products and our
09:41capabilities from us.
09:42And so what that means is and as I talk a little bit about what my responsibility here
09:47at Freddie Mac is, but what that means is I have to have people who have a strong, firm
09:52understanding of all aspects of that business.
09:55And so our leadership here at Freddie Mac is filled with folks who have come from the primary
10:00side, who have lived on the secondary side, who have actually sat butts in seats to do servicing,
10:06who have originated, who have been CFOs, who have led mortgage companies, who have done
10:10collections, as we talked about for myself, but who have also built technology solutions
10:15to the marketplace.
10:16And so if we've sat in those seats, we understand how that all comes together.
10:20And so our key has been a strategic ally has to be, what is your problem, Zeb?
10:26How can we help?
10:27And so that problem could be, we have a cost increase associated with leveraging a third
10:32party.
10:32We have a system issue.
10:34We have a product need.
10:37And so our goal is, is we have teams that really are focused on just that with the idea
10:42of putting our arms around our customers every day.
10:45And so we'll come out and we have these, these groups within the team, whether it's our education
10:52group, that we can put together a custom platform plan to educate your loan officers on a program
10:59that's unique to you, that may be of ours with the goal again, is to help the American consumer.
11:05And so when we think about being an ally, it's not, it's not us marketing.
11:09I can tell you that.
11:10So we see a lot of other investors put out marketing material, folks who come up and down
11:15and folks who will say, hey, we can do this in this amount of time.
11:19And it's, that's not us.
11:20Our goal is very specifically to find a way to help reduce steps in cost with the seller
11:26servicers in a way that is done in a safe and sound manner that is very focused.
11:31So we put out one of the things that we do.
11:33I don't know if you, if you've ever checked it out, but it's, it's worth your time.
11:36On an annual basis, we put out some updates.
11:39That's a cost to originate study.
11:41That cost to originate study also is, is, is, is combined with a loan quality study.
11:48So all the loans we buy, we want them to be of the highest quality of the industry because
11:52that reduces back and forth.
11:54That reduces the potential for a defect that reduces the potential for a repurchase that
11:58reduces the impact for going back to a consumer and asking them for things.
12:01And it reduces risk on the secondary market and the investor community of not having a
12:06clearer view of, of what this loan transaction they acquired is.
12:09And so when we do that and we put all these pieces together, we look at it and we say
12:14costs
12:15have increased 36% just since 2020.
12:18So I know we're talking about since 2012, how much costs have increased, but just since 2020
12:23alone, we've seen costs increased 36%.
12:27So we sit on a, on a trove of information because you submit loans to our LPA, our automated
12:32underwriting system.
12:34Lenders go in, we get to see, here's what the application date is.
12:37We get to see the information about the borrower.
12:39We get to see what third party services are used.
12:42We then get to see when did that loan actually close?
12:44So that's very valuable.
12:46And so when you talk about being a strategic ally, I then get to see, well, who was your
12:50POS provider?
12:51Why did it take so long?
12:52Who was your LOS provider or why did it take so long?
12:54And what we do is we deploy resources to work with lenders directly onsite to break down
13:01their process in a step-by-step view that allows us to then say, where's your bottleneck?
13:06Where's your pain point?
13:07And so as you look through this end-to-end process, we can help you.
13:11And so we've done cost evaluations at the individual lender level over the years.
13:16And so if we can do this with lenders and break it down, we expect that if lender A,
13:22we've done an analysis of that leveraging Loan Product Advisor and the overall suite of tools
13:28that Freddie Mac works with the industry to provide, that if it can help reduce that cost
13:34and that structure, 40% less defects, $1,700 less per loan to manufacture, creating greater
13:41margins, we actually believe it's done in the trenches.
13:45So that's what a strategic ally is doing, is we're not just saying, here's marketing
13:50material, we're actually showing up onsite, helping you break down your end-to-end process
13:55and those who are using it within our study.
13:58When you check this out, the idea is, is we do a small lender, medium lender, large lender
14:02view because not everyone has the resources.
14:05So where you don't have the resources, Freddie Mac's here to help break that down, cut out
14:10the process, reduce steps, reduce unnecessary solutions in the process and help you get to
14:16a streamlined, high-quality loan review that Freddie Mac is willing to bless immediately.
14:22And so that's what a strategic ally to housing is doing, is we're looking at all aspects of
14:27the transaction and helping lenders reduce that cost by reducing steps in their manufacturing
14:32process.
14:33And our hope is also passing that savings along to the American consumer, which is extremely
14:39important for the role that we all play.
14:41It's a highly collaborative approach, I would say, and this probably asking you to go back
14:47and touch more on what you just shared, but what do you think makes this approach to customer
14:54collaboration unique or different, or what are some standout aspects in the way that you're
15:00doing things?
15:01It's not easy.
15:03What I describe in those lenders, as you talked about, there's real pain that's going on.
15:07So we can talk about these stats, we can come on, we can help people.
15:11But it starts with Freddie Mac being willing to listen and engage.
15:15And I will tell you, that was not always the case.
15:18And so we had to go through a significant change over the years, because what I had heard for
15:24a period of time was investors as a whole, they didn't want to listen.
15:29They wanted to tell us how to do business.
15:30They didn't want a partner.
15:32And I sat down with several of these lenders.
15:34You know, I've told the story in different instances where it was, when I first took
15:38this role and started engaging with lenders, it was not positive.
15:42It was, you present at us, you don't partner with us.
15:46And I took that to heart.
15:47And I really sat down.
15:49And I'll never forget, was I walked into a room, and there was what equates to 70% of
15:54the volume.
15:55And there was individuals from each one of those institutions waiting for me.
15:58And they basically wanted to tell me all the things that we could do better.
16:04And all they needed was somebody to sit down and listen.
16:06And so I listened.
16:07And my view was, at the end of the four hours, explained very clearly to the group was, now
16:14you have to be a part of the solution.
16:16And in that, being a part of the solution means you're going to be our counsel.
16:20And so what we started to do was look at it and say, we've created these advisory boards.
16:24We've done these things in the past.
16:25And we've presented all this material to lenders.
16:28But how do we co-create?
16:30How do we co-develop?
16:31Actually means identifying a problem the industry needs to have solved, strapping up our boots,
16:38getting together, and working on that.
16:40So we created these individual councils to where historically, you would have folks sitting
16:44on these advisory boards for years upon years, where we would just talk about things
16:48that are pie in the sky.
16:49But at the end, the idea is we weren't solving any individual problems.
16:53So as a result of those boards, let's identify those problems.
16:57Let's focus on the outcomes.
16:59And let's say very clearly, this is not something because we are a business that has to run like
17:05a profitable business that has to suit the entire ecosystem.
17:08So we have to say no.
17:10So if I say no, Zeb, like I have to give you the reason why it doesn't make sense for
17:14Freddie Mac's business.
17:15And I think historically, we would just hide behind this iron curtain of because we said so.
17:21And that's not what was going to work for our business.
17:24So we've opened the door.
17:25And we've just really been able to focus on solving small problems and keeping a focus
17:31to drive those outcomes.
17:32And they just incrementally grow.
17:34And as a result, repurchase alternative programs were born.
17:38And we've been able to create things that have increased loan quality.
17:45It's incented loan quality.
17:47So one thing where it was like, hey, repurchases are high.
17:50It was like, well, are you using this tool?
17:52Well, what's the reason?
17:53Well, wait, Freddie Mac's not doing this right.
17:55Why am I questioning everything that you do?
17:58Well, maybe we needed to make changes.
17:59And so we evaluated that.
18:01And the leadership within Freddie Mac really took that to heart.
18:04And they have their boots on the ground.
18:07They're interacting.
18:08They're participating.
18:09And so our goal is to look at every problem in a unique lens, looking at it through the
18:14entire process to include consumer, technology, operation, all the way through to selling
18:21a loan, including how it gets to the investor.
18:23And then how does that loan get serviced?
18:25And if we look at it through that lens, that co-creation, invite the different parties that
18:30are a part of that process in it with us.
18:32So the loan origination systems that so many people are dependent on, invite them in, have
18:37the conversation with them, invite all the different parties who may have a participation
18:41process.
18:43They need to be at the table with us.
18:45So when we're thinking about it, we're delivering the right thing and we're partnering with the
18:49organization in the right way.
18:51And how are you guys using data to identify opportunities for improvement for customers?
18:58I gave the example a few minutes ago about how we can take in loan application data to our
19:06loan LPA solution, which is our AUS.
19:11And so taking in that information is just the starting point.
19:16So as folks are submitting every appraisal data point to us, how we leverage that data,
19:23learn from that data, create opportunities to reduce costs for the American consumer to say,
19:28Zeb, where you live, the home that you've bought, when you purchased it, we've seen appraisals
19:34from other properties, we have a data model, we're comfortable with the value of a property,
19:39do we need an appraisal on this home?
19:41So we're taking in so much information from the application, the property, other aspects
19:47of the transaction that says, are we comfortable?
19:51And can that lead to a reduction of cost to the American consumer?
19:55While actually looking at the risk and saying, are we net neutral or better?
20:00And the majority of the time, we're going to end up in a net better position from a risk
20:06standpoint and finding ways to help the American consumer reduce costs.
20:10So that's one of the examples.
20:12An additional example is just overall, how do we take it and force it back into the process
20:18to then say, how do we need this data point from the loan origination system?
20:24So everything that we do and we put out in the market then triggers a process that then
20:29says the origination system, the underwriting system, the dock provider, all of these things.
20:36So when we mandate something into the system, are we doing so through the lens of now you
20:42have cost, now you have cost.
20:44The industry spent $2 billion in order to remove a billion dollars out of the process.
20:48So what we're doing is we're taking that in our evaluation of overall credit policy evaluation.
20:54We're taking that in order to make better decisions on every piece of action that we
20:59make.
21:00And then we're using it to then feed information back to those lenders through the trusted advisor
21:05engagements that we're doing with them to then make them better.
21:08And that's how you leverage data in order to make better decisions for managing the risk
21:13of the industry, which is the seat that we sit in, as well as how they can use it to
21:18leverage to become better at originating loans and reducing costs for the American consumer.
21:22Do you have an example that you can share of the kind of customer outcomes that you're
21:27helping support where you've seen, I guess, where you've seen the most success?
21:32One of the unique things, as you mentioned earlier, was it's hard for lenders today.
21:38Oddly enough, there are still a lot of lenders who are coming up who are creating new business.
21:42And so the cyclical nature of the mortgage origination business is helping us be able
21:48to then say, great, today it might be slow, but tomorrow, how are we going to get to the
21:53outcomes of there will be growth?
21:55When that growth happens, I think everybody's interested in understanding, well, you and
22:00I would be rich if we figured it out today on this call.
22:03But really what we're trying to get to is, how do we look at all the information, the new
22:08lenders who are coming in looking to help consumers, the new technology providers who
22:12are coming in to help sellers, how are we staying ahead of them?
22:16How do we make it as easy as possible to do business with Freddie Mac?
22:19And from our viewpoint, it's creating the new products that are going to help.
22:24The number one problem across the entire ecosystem for a new consumer is to be able to save for
22:30down payment.
22:31And I think as I think about this, it was like, I don't know about you, but it was like,
22:35I vividly remember trying to purchase a home.
22:38And so what did that mean?
22:40It was like peanut butter and jelly sandwiches.
22:42I got to save every nickel.
22:43It was, I had to really grind in order to be able to save for that down payment and to
22:47be able to cover closing costs.
22:49And so at Freddie Mac, like we really, really think about that.
22:52And so what did that mean?
22:53We created a product called DPA1.
22:56DPA1 is a solution that we brought to market that helps loan officers identify.
23:00This is a free solution that's available to every loan officer and every financial institution
23:06in the market that can help connect the dots of taking this data and being able to identify
23:12down payment opportunities that are offered at the grant levels by states, by counties,
23:18by other third parties.
23:19We manage all of this in one system that loan officers can hit and see if there is funds
23:24available for a consumer to help with that down payment assistance.
23:27And so as we look at it, it's like, what can Freddie Mac do beyond providing subsidies,
23:32beyond providing products?
23:34It has to be helping take that data, coalescing it, making it available back to the market for
23:41them to be able to use to be more sophisticated to create greater opportunities for homeowners.
23:45I got one last question to ask for you.
23:47So what would you or what message would you leave our audience or with the housing industry
23:54leaders about working with Freddie Mac?
23:56I would just ask whether you're a technology provider looking to get into this industry,
24:02whether you are a broker who wants to become a lender, whether you're becoming a broker.
24:09We're more than a secondary market provider.
24:12For every lender out there, we're interested in engaging with you.
24:16With every servicer, we're engaging with ensuring that your success equals American consumer success.
24:23And so from our seat, if you need help because your costs are too high, I want you to pick
24:28up the phone.
24:28I want you to call your Freddie Mac representative.
24:30I want you to call 1-800-FREDDIE.
24:32I want you to get on the phone, reach out to us because we truly are focused on how we
24:37can help the entire ecosystem.
24:39And we have teams dedicated to each and every aspect of having experience from each seat in
24:47this ecosystem.
24:47And that's the unique view that we can provide.
24:50And in the end, it has to make business sense for Freddie Mac, but we have to be able to
24:54come together and identify those opportunities that can truly make a difference to the ecosystem
25:00in managing the risk, in managing the liquidity, managing the stability, and managing the affordability
25:07of the entire process.
25:08So as we look at it, we want to partner.
25:12We can help you solve a problem.
25:14We can be, you can have a voice in solving the larger problems.
25:17And so from our seat, it starts with engagement.
25:20It ends with engagement.
25:22And we look to make this an entire better lending process for all of America and the folks who
25:28are with it.
25:30Kevin, thank you so much for coming on.
25:32It was a real pleasure.
25:32And I appreciate you taking the time.
25:34Zeb, thank you for everything.
25:36Thank you to Housing Wire.
25:37We appreciate everything that you do for the industry as well.
25:40I really appreciate the time and grateful we could be here.
25:43Yes, sir.
25:44We'll be seeing you.