The mortgage application forms from Fannie Mae and Freddie Mac should make for stronger loans, according to a note from an analyst at Moody's Investors Service.
While the new forms
"The new application form provides the GSEs with more detailed information electronically and allows them to improve credit analysis by linking various borrower characteristics to loan performance," Ekram wrote. "Additionally, standardized definitions of data fields will reduce the GSEs' reliance on lenders to ensure that the data are correctly defined."
In particular, the forms feature some added and expanded fields, such as more choices for categories of borrower assets or the addition of the sources of gifts and grants. By making the data more granular and accurate, the analysts said the data will help Fannie and Freddie to fine-tune automated underwriting models and to differentiate credit risk more effectively, Ekram said in the note.