- 15 minutes ago
n 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.
00:31Kevin, thank you for joining me.
00:44All right, Kevin, thank you for joining me.
00:46Thanks for having me.
00:47Yes, sir.
00:48I know we've got quite a bit to talk about,
00:52but before we dive into the specifics of our conversation,
00:55I was curious, can you tell me a bit about yourself?
00:58How long have you been at Freddie Mac and in this role, and what does that role imply?
01:04Yeah, so I've been at Freddie Mac for eight years.
01:09I've been in the mortgage industry north of 25.
01:12I think from my side, I've been lucky enough to have a seat in almost every potential role in this
01:21industry,
01:21from originations to loss mitigation to door-to-door collections back when we were allowed to do those things.
01:26So my responsibility here at Freddie Mac is that I have responsibility of all of industry engagement.
01:35So think of all the sellers, which are all the lenders who do business and sell loans to Freddie Mac,
01:40all the third-party partnerships of the technology ecosystem that lenders use the technology for the LOSs,
01:48the POS, the dock providers, the appraisers, to all of the things in between the entire ecosystem.
01:54We have teams of individuals who work with those companies.
01:57So I also have responsibility over our affordable housing initiatives and goals.
02:04And so those things that are regulatory required, those things that are mandated,
02:09all associated with affordable lending and the goals we have around that,
02:13inclusive of marketing, communications, our call center, and a few other aspects of our business here at Freddie Mac.
02:20Did I hear you right?
02:21You said you did door-to-door collections?
02:23I did door-to-door collections.
02:25It was interesting.
02:26Back at a time during the financial company booms that were out there,
02:32there were several of them, is you originated the loan, you processed the loan,
02:36you underwrote the loan, you closed the loan.
02:38And if that loan went, the link went, you were lucky enough to do the loss mitigation process,
02:44including several times showing up, you know, New Year's Eve,
02:47showing up to different institutions and asking for checks.
02:50And it was very interesting.
02:52But it really helped put things in perspective of the entire ecosystem and how the process flows.
03:00I got to tell you, it's like, you know, real early on in my career,
03:03but it was one of those jobs that just sits with you forever because you do have to sit
03:09and understand every aspect of our entire business.
03:12Right.
03:12Yeah, I've never met anyone that actually has done that.
03:16So I would imagine that would be one.
03:17I'm sure you've got quite a few stories that I'd like to hear.
03:21There are stories.
03:21We can talk about them at a different time.
03:23Let's set the stage with an overview of the current environment,
03:29which, you know, people are trying to survive.
03:32And then we can dive into the specifics.
03:34We've got right now, from a lender perspective,
03:36lenders navigating the cost pressures.
03:39There's supply, limited supply, changing technology,
03:44rapidly changing technology, and evolving compliance landscape.
03:50How do you see Freddie Mac's role as a helper or helping the industry move through this?
03:58To me, this is more of a once in an industry type change that we're going through.
04:05It's a great question.
04:06I think the way that you framed it is super important.
04:09And I don't think anyone feels it more than those companies who are under the stress,
04:14besides the American consumer.
04:15And so I talk a lot about why I love working at Freddie Mac and what it means to me
04:22is because I think in the end, like our impact, all of us, you, housing wire,
04:29loan officer listening, processor, real estate agent, everybody involved.
04:34I think it's so easy to think about your role in its narrow focus that we believe that it is,
04:42as opposed to the broad impact that collectively we all make on overall society.
04:49And if you back that out, what that means is,
04:51is the impact that we can make over the U.S. housing market,
04:54we all have to contribute to do so.
04:58U.S. housing market has the largest, one of the largest impacts on the U.S. economy,
05:04which has the largest impact on the world economy,
05:06which has the biggest impact on society as we know it.
05:10And so when you think about the core things that are in anyone's life,
05:13it's food, water, shelter, right?
05:16And so we are in that shelter aspect.
05:18And it really matters.
05:20And it's really personal to me.
05:22And so why I actually love what we do here
05:26is because our ability to influence the ecosystem
05:30in a way that is truly unique.
05:34And what I mean by that is that Freddie Mac,
05:37we get a chance to work with.
05:39And part of the reason why I love it so much is
05:42I can pick up the phone and call most anybody in the entire industry.
05:45And I think we have a chance to have a real discussion
05:48about things that are impactful to the American consumer,
05:51because that's what we're all focused on.
05:53And so as costs have risen, there have been multiple factors.
05:57So as you identified, we're in a very unique time.
06:00We've been in a lot of unique times throughout this industry over the years.
06:04And interest rates have been extremely high historically.
06:07And that has created pressure on home prices over the years.
06:12And I think what makes this a unique time
06:14is even as we saw the financial crisis in 2007, 8, 9,
06:18and into that process was home prices continued
06:21to kind of maintain in the majority of the places,
06:25but they also shrunk when interest rates went up.
06:27And I think we're in a place now where home is the largest investment
06:31an American consumer makes.
06:33And so how you bring that forward, it wasn't always the case,
06:37but now you want that asset to retain its value as much as possible.
06:42And that has an impact over the entire ecosystem.
06:46And so the way that I think about this is our ability to contribute is
06:50it starts first and foremost.
06:52We're here to provide liquidity, stability,
06:54and affordability to the marketplace in a safe and sound manner.
06:58Our role is to provide that stability by providing that liquidity
07:03and coming up with ways to promote affordable lending products
07:07back to the American consumers.
07:09And so when I think about folks trying to survive,
07:12our role can't just be transactional in providing a price.
07:17Our role has to be we have to be a true partner
07:19to every seller servicer who wants to do business with Freddie Mac
07:23with our lens being that we care about you
07:26and how you deliver as a lender or a servicer
07:29to the borrowers of America in order to reduce those prices.
07:35And so we have a lot of different ways that we can help do that
07:37through beyond product, but also how we engage with the industry.
07:41So I think we're in the back end of 2026, which is crazy.
07:48I think what I heard a couple of years ago as lenders were talking about,
07:52it was survive to 25, right?
07:56So that phrase was coined.
07:58I think people felt really good.
08:00I think the industry, even as far as the first quarter of this year,
08:04folks still felt pretty good.
08:05And I think once we got the MBA secondary in May,
08:08folks started to feel a little bit more pressure.
08:10Our job is to find creative ways that can help unlock
08:14that affordability component, ways that we can help you think
08:17about your business to reduce steps, to therefore reduce costs.
08:21And we do that in a lot of really, really good ways.
08:24Yeah, I can't remember.
08:26I might've been on a previous phone call with your team,
08:30but the phrase strategic housing ally was brought up several times.
08:35And I'm curious to know if you can unpack.
08:40I mean, I think, you know, obviously the intuition says that it's in the phrase,
08:44it's in the title there, but can you unpack what that means in practical terms
08:48and how that spills over to your customers?
08:51Yeah, so it's a great question.
08:55And you don't like to give all your secrets away,
08:58but it starts with really caring about the business of those partners you do business with.
09:04And so we've developed a mindset internally at Freddie Mac
09:09that puts us in a position to care about every aspect of your business.
09:15And so historically, you think about it and you say,
09:17Freddie Mac is a secondary market player and they're here to consume loans
09:21and then trade those on the secondary market.
09:23But our goal strategically for years has been that we have to be innovative
09:29about the products we bring to market,
09:31think about the consumers our originators do business with when we create those products
09:37and think about the technology ecosystem that they consume,
09:41our tools, our products, and our capabilities from us.
09:44And so what that means is,
09:46and as I talk a little bit about what my responsibility here at Freddie Mac is,
09:50but what that means is I have to have people who have a strong firm understanding
09:55of all aspects of that business.
09:57And so our leadership here at Freddie Mac is filled with folks who have come from the primary
10:03side, who have lived on the secondary side, who have actually sat butts in seats to do servicing,
10:08who have originated, who have been CFOs, who have led mortgage companies,
10:12who have done collections, as we talked about for myself,
10:15but who have also built technology solutions to the marketplace.
10:18And so if we've sat in those seats, we understand how that all comes together.
10:23And so our key has been a strategic ally has to be, what is your problem, Zeb?
10:28How can we help?
10:29And so that problem could be, we have a cost increase associated with leveraging a third party.
10:35We have a system issue.
10:36We have a product need.
10:39And so our goal is, is we have teams that really are focused on just that,
10:44with the idea of putting our arms around our customers every day.
10:47And so we'll come out and we have these, these groups within the team,
10:53whether it's our education group, that we can put together a custom platform plan
10:58to educate your loan officers on a program that's unique to you,
11:02that may be of ours, with the goal, again, is to help the American consumer.
11:07And so when we think about being an ally, it's not, it's not us marketing.
11:11I can tell you that.
11:13So we see a lot of other investors put out marketing material,
11:15folks who come up and down and folks who will say,
11:19hey, we can do this in this amount of time.
11:21And it's, that's not us.
11:23Our goal is very specifically to find a way to help reduce steps in cost
11:27with the seller servicers in a way that is done in a safe and sound matter
11:32that is very focused.
11:33So we put out one of the things that we do.
11:36I don't know if you've ever checked it out, but it's worth your time.
11:39On an annual basis, we put out some updates.
11:42That's a cost to originate study.
11:43That cost to originate study also is combined with a loan quality study.
11:50So all the loans we buy, we want them to be of the highest quality of the industry
11:54because that reduces back and forth.
11:56That reduces the potential for a defect.
11:58That reduces the potential for a repurchase.
12:00That reduces the impact for going back to a consumer and asking them for things.
12:04And it reduces risk on the secondary market and the investor community
12:08of not having a clearer view of what this loan transaction they acquired is.
12:12And so when we do that and we put all these pieces together,
12:15we look at it and we say costs have increased 36% just since 2020.
12:21So I know we're talking about since 2012, how much costs have increased.
12:25But just since 2020 alone, we've seen costs increase 36%.
12:29So we sit on a trove of information because you submit loans to our LPA,
12:34our automated underwriting system.
12:36Lenders go in.
12:37We get to see here's what the application date is.
12:40We get to see the information about the borrower.
12:42We get to see what third-party services are used.
12:44We then get to see when did that loan actually close.
12:47So that's very valuable.
12:49And so when you talk about being a strategic ally, I then get to see,
12:52well, who is your POS provider?
12:53Why did it take so long?
12:55Who is your LOS provider or why did it take so long?
12:57And what we do is we deploy resources to work with lenders directly on site
13:02to break down their process in a step-by-step view
13:06that allows us to then say, where is your bottleneck?
13:09Where is your pain point?
13:10And so as you look through this end-to-end process, we can help you.
13:13And so we've done cost evaluations at the individual lender level over the years.
13:19And so if we can do this with lenders and break it down,
13:22we expect that if lender A, we've done an analysis of,
13:27that leveraging Loan Product Advisor and the overall suite of tools that Freddie Mac works with the industry
13:33to provide that if it can help reduce that cost and that structure,
13:3840% less defects, $1,700 less per loan to manufacture, creating greater margins,
13:44we actually believe it's done in the trenches.
13:48So that's what a strategic ally is doing, is we're not just saying, here's marketing material.
13:53We're actually showing up on site, helping you break down your end-to-end process.
13:57And those who are using it, within our study, when you check this out,
14:01the idea is we do a small lender, medium lender, large lender view,
14:05because not everyone has the resources.
14:08So where you don't have the resources, Freddie Mac's here to help break that down,
14:12cut out the process, reduce steps, reduce unnecessary solutions in the process,
14:17and help you get to a streamlined, high-quality loan review
14:21that Freddie Mac is willing to bless immediately.
14:24And so that's what a strategic ally to housing is doing,
14:27is we're looking at all aspects of the transaction
14:30and helping lenders reduce that cost by reducing steps in their manufacturing process.
14:36And our hope is also passing that savings along to the American consumer,
14:40which is extremely important for the role that we all play.
14:43It's a highly collaborative approach, I would say.
14:47And this is probably asking you to go back and touch more on what you just shared.
14:52But what do you think makes this approach to customer collaboration unique or different?
15:00Or what are some standout aspects in the way that you're doing things?
15:04It's not easy.
15:05What I describe in those lenders, as you talked about,
15:08like there's real pain that's going on.
15:10So we can talk about these stats.
15:12We can come on.
15:12We can help people.
15:13But it starts with Freddie Mac being willing to listen and engage.
15:18And I will tell you, that was not always the case.
15:20And so we had to go through a significant change over the years.
15:25Because what I had heard for a period of time was investors as a whole,
15:30they didn't want to listen.
15:31They wanted to tell us how to do business.
15:33They didn't want a partner.
15:34And I sat down with several of these lenders.
15:36You know, I've told the story in different instances where it was,
15:40when I first took this role and started engaging with lenders, it was not positive.
15:44It was, you present at us.
15:46You don't partner with us.
15:48And I took that to heart.
15:50And I really sat down.
15:51And I'll never forget was I walked into a room.
15:54And there was what equates to 70% of the volume.
15:57And there was individuals from each one of those institutions waiting for me.
16:01And they basically wanted to tell me all the things that we could do better.
16:06And all they needed was somebody to sit down and listen.
16:09And so I listened.
16:10And my view was, at the end of the four hours, explained very clearly to the group was,
16:16now you have to be a part of the solution.
16:19And in that, being a part of the solution means you're going to be our counsel.
16:22And so what we started to do was look at it and say, we've created these advisory boards.
16:26We've done these things in the past.
16:28And we've presented all this material to lenders.
16:30But how do we co-create, how do we co-develop actually means identifying a problem the industry needs to
16:37have solved,
16:39strapping up our boots, getting together, and working on that.
16:42So we created these individual councils to where historically you would have folks sitting on these advisory boards for years
16:48upon years
16:49where we would just talk about things that are pie in the sky.
16:52But at the end, the idea is we weren't solving any individual problems.
16:56So as a result of those boards, let's identify those problems.
16:59Let's focus on the outcomes.
17:01And let's say very clearly, this is not something because we are a business that has to run like a
17:08profitable business
17:09that has to suit the entire ecosystem.
17:11So we have to say no.
17:12So if I say no, Zeb, like I have to give you the reason why it doesn't make sense for
17:17Freddie Mac's business.
17:18And I think historically we would just hide behind this iron curtain of because we said so.
17:24And that's not what was going to work for our business.
17:26So we've opened the door and we've just really been able to focus on solving small problems
17:32and keeping a focus to drive those outcomes.
17:35And they just incrementally grow.
17:37And like as a result, repurchase alternative programs were born.
17:41And we've been able to create things that have increased loan quality.
17:47It's incented loan quality.
17:49So one thing where it was like, hey, repurchases are high.
17:53It was like, well, are you using this tool?
17:55Well, what's the reason?
17:56Well, wait, Freddie Mac's not doing this right.
17:57Why am I questioning everything that you do?
18:00Well, maybe we needed to make changes.
18:02And so we evaluated that.
18:03And the leadership within Freddie Mac really took that to heart.
18:07And they have their boots on the ground.
18:09They're interacting.
18:11They're participating.
18:11And so our goal is to look at every problem in a unique lens, looking at it through the
18:16entire process to include consumer, technology, operation, all the way through to selling a
18:24loan, including how it gets to the investor.
18:26And then how does that loan get serviced?
18:28And if we look at it through that lens, that co-creation, invite the different parties that
18:33are a part of that process in it with us.
18:35So the loan origination systems that so many people are dependent on, invite them in.
18:39Have the conversation with them.
18:41Invite all the different parties who may have a participation process.
18:46They need to be at the table with us.
18:47So when we're thinking about it, we're delivering the right thing and we're partnering with the
18:51organization in the right way.
18:53And how are you guys using data to identify opportunities for improvement for customers?
19:00I gave the example a few minutes ago about how we can take in loan application data to our
19:08loan LPA solution, which is our AUS.
19:14And so taking in that information is just the starting point.
19:18So as folks are submitting every appraisal data point to us, how we leverage that data, learn
19:26from that data, create opportunities to reduce costs for the American consumer to say,
19:31Zeb, where you live, the home that you've bought, when you purchased it, we've seen
19:36appraisals from other properties.
19:38We have a data model.
19:39We're comfortable with the value of a property.
19:41Do we need an appraisal on this home?
19:43So we're taking in so much information from the application, the property, other aspects of the
19:50transaction that says, are we comfortable and can that lead to a reduction of cost to the
19:56American consumer, while actually looking at the risk and saying, are we net neutral or
20:02better?
20:03And the majority of the time, we're going to end up in a net better position from a risk
20:09standpoint and finding ways to help the American consumer reduce costs.
20:13So that's one of the examples.
20:15An additional example is just overall, how do we take it and force it back into the process
20:21to then say, how do we need this data point from the loan origination system?
20:27So everything that we do and we put out in the market then triggers a process that then
20:32says the origination system, the underwriting system, the doc provider, all of these things.
20:39So when we mandate something into the system, are we doing so through the lens of now you have
20:44cost, now you have cost, the industry spent $2 billion in order to remove a billion dollars
20:50out of the process.
20:51So what we're doing is we're taking that in in our evaluation of overall credit policy
20:56evaluation.
20:57We're taking that in order to make better decisions on every piece of action that we
21:02make.
21:02And then we're using it to then feed information back to those lenders through the trusted advisor
21:07engagements that we're doing with them to then make them better.
21:11And that's how you leverage data in order to make better decisions for managing the risk
21:16of the industry, which is the seat that we sit in, as well as how they can use it to
21:20leverage
21:21to become better at originating loans and reducing costs for the American consumer.
21:24Do you have an example that you can share of the kind of customer outcomes that you're
21:30helping support where you've seen, I guess, where you've seen the most success?
21:34One of the unique things, as you mentioned earlier, was it's hard for lenders today.
21:40Oddly enough, there are still a lot of lenders who are coming up who are creating new business.
21:45And so the cyclical nature of the mortgage origination business is helping us be able
21:50to then say, great, today it might be slow, but tomorrow, how are we going to get to the
21:55outcomes of there will be growth?
21:58When that growth happens, I think everybody's interested in understanding, well, you and I
22:02would be rich if we figured it out today on this call.
22:05But really what we're trying to get to is, how do we look at all the information, the
22:10new lenders who are coming in looking to help consumers, the new technology providers who
22:15are coming in to help sellers?
22:16How are we staying ahead of them?
22:18How do we make it as easy as possible to do business with Freddie Mac?
22:22And from our viewpoint, it's creating the new products that are going to help.
22:26The number one problem across the entire ecosystem for a new consumer is to be able to save for
22:33your down payment.
22:34And I think as I think about this, it was like, I don't know about you, but it was like,
22:38I vividly remember trying to purchase a home.
22:41And so what did that mean?
22:42It was like peanut butter and jelly sandwiches.
22:44I got to save every nickel.
22:46It was, I had to really grind in order to be able to save for that down payment and to
22:50be able to cover closing costs.
22:51And so at Freddie Mac, like we really, really think about that.
22:55And so what did that mean?
22:56We created a product called DPA1.
22:58DPA1 is a solution that we brought to market that helps loan officers identify.
23:03This is a free solution that's available to every loan officer and every financial institution
23:08in the market that can help connect the dots of taking this data and being able to identify
23:14down payment opportunities that are offered at the grant levels by states, by counties,
23:21by other third parties.
23:22We manage all of this in one system that loan officers can hit and see if there is funds
23:26available for a consumer to help with that down payment assistance.
23:30And so as we look at it, it's like, what can Freddie Mac do beyond providing subsidies,
23:35beyond providing products?
23:37It has to be helping take that data, coalescing it, making it available back to the market for
23:43them to be able to use to be more sophisticated to create greater opportunities for homeowners.
23:48I got one last question to ask for you.
23:49So what would you or what message would you leave our audience or with the housing industry
23:55leaders about working with Freddie Mac?
23:58I would just ask whether you're a technology provider looking to get into this industry,
24:04whether you are a broker who wants to become a lender, whether you're becoming a broker.
24:11We're more than a secondary market provider.
24:14For every lender out there, we're interested in engaging with you, with every servicer we're
24:20engaging with, ensuring that your success equals American consumer success.
24:26And so from our seat, if you need help because your costs are too high, I want you to pick
24:30up the phone.
24:31I want you to call your Freddie Mac representative.
24:33I want you to call 1-800-FREDDIE.
24:35I want you to get on the phone, reach out to us, because we truly are focused on how we
24:39can help the entire ecosystem, and we have teams dedicated to each and every aspect of
24:45having experience from each seat in this ecosystem.
24:50And that's the unique view that we can provide.
24:52And in the end, it has to make business sense for Freddie Mac, but we have to be able to
24:57come
24:57together and identify those opportunities that can truly make a difference to the ecosystem
25:03in managing the risk, in managing the liquidity, in managing the stability, and managing the
25:09affordability of the entire process.
25:11So as we look at it, we want to partner.
25:14We can help you solve a problem.
25:16You can have a voice in solving the larger problems.
25:20And so from our seat, it starts with engagement.
25:23It ends with engagement.
25:24And we look to make this an entire better lending process for all of America and the folks who
25:30are with it.
25:32Kevin, thank you so much for coming on.
25:34It was a real pleasure, and I appreciate you taking the time.
25:37Zeb, thank you for everything.
25:39Thank you to Housing Wire.
25:40We appreciate everything that you do for the industry as well.
25:43I really appreciate the time and grateful we could be here.
25:46Yes, sir.
25:46We'll be seeing you.