Monday, February 17, 2020

How APIs are Changing the Way Fannie Mae--and its Customers--Do Business

By Mike Sorohan
January 1, 2019

Application Programming Interfaces
Fannie Mae
Developer Portal

Application Programming Interfaces, commonly known as APIs, are the Current Big Thing--although they've been around for more than 50 years.

What's making APIs "hot" is in how they're being used in the mortgage industry. At Fannie Mae, Washington, D.C., APIs are transforming the way it and its customers do business.

Prabkahar Bhogarajhu, Fannie Mae Vice President of Industry Integration, Business Architecture & Digital Shared Services, said Fannie Mae began exploring developing its own APIs in 2016.

"As we looked at emerging innovations in the workplace, we realized there were opportunities to streamline how our systems integrated," Bhogarajhu said. "Through thoughtful exploration, we recognized an opportunity to bring these products into the marketplace to create value for our customers. By packaging data in smaller, finer-grain chunks, we can offer customers the ability to reimagine their business process and how they interact with us."

Satya Addagarla, Fannie Mae Vice President of Single-Family Front-End Technology, said the Developer Portal provides customers the ability to access a suite of APIs that integrate with Fannie Mae systems across the loan life cycle. These APIs help level the playing field for lenders and technology solution providers by giving them access to information that they can customize to meet their needs; and it uses industry-standard data formats and protocols so lenders can integrate the Fannie Mae APIs into their systems quickly and easily.

"When we looked at benefits, we saw it in four buckets," Addagarla said. "The first is that the API can be used by anyone from anywhere, through multiple channels; they can all use the same interface. Second, we could deploy the platform really quickly. Third, since they are fine-grained, we can used them to modify our workloads. And fourth, we saw that this could create a great customer experience."

What is an API?
So, what exactly is an API, and how does it work? Carey Wodehouse, an IT/development content writer who blogs for Upwork (, says most consumers and businesses have been using APIs in some form or another since the 1960s.

"Without APIs, the digital experiences that we expect every day as consumers wouldn't be possible," Wodehouse said. "They're doing everything from driving information-rich marketing campaigns and connecting mobile apps to streamlining internal operations. Businesses now know that investing in an API strategy can pay significant dividends."

Wodehouse notes a perfect example of an API is an ATM--automated teller machine. When a customer visits an ATM, it accesses the customer's account and completes the transaction (Application). APIs allow the ATM to communicate with the bank, translating input into output (Programming). The screen, keypad and cash slot allow the input (PIN number, request) and output (cash, statement) to occur (Interface).

"Interfaces are how we communicate with a machine; with APIs, it's much the same, only we're replacing users with software," Wodehouse says. "APIs do a lot of heavy lifting, both in mobile and on the web. They're responsible for nearly everything we do--and with just a few taps or clicks, let you do things like order a pizza, book a hotel, rate a song, or download software. APIs work quietly in the background, making the interactivity we expect--and rely upon--possible."

Path to the API
Developing an effective, seamless API, of course, is hard work--and takes a lot of research. By 2017, Fannie Mae was ready to put concept into action. In February 2017, Fannie Mae's Economic & Strategic Research Group surveyed senior mortgage lending leaders through its quarterly Mortgage Lender Sentiment Survey ( to tap lender views about data strategy and technological innovation in general, and, specifically, to understand their experience with APIs. Key findings included:

--Three in five lenders agreed their firm is making the best use of data for their mortgage business. However, only one-third of lenders said their firm has a formal data strategy, including a dedicated internal data team. Nearly four in 10 lenders said they address data-related activities on an ad-hoc basis.

--The majority of lenders surveyed said they are technology followers, not early adopters. Additionally, four in 10 said the pace of technological innovation in the mortgage industry is too slow.

--Half of lenders surveyed either incorporated APIs into their mortgage process or used them on a trial basis. In contrast, very few lenders said their firm has looked into using Chatbots.

--Lenders expected adoption of APIs to grow in the future state. However, nearly 20 percent of lenders said they do not plan to use APIs within the next two years.

--Lenders who currently use APIs do so primarily to integrate information, such as appraisals and verifications, with their Loan Origination System and other services within their firm.

--Lenders saw loan production (origination, processing, underwriting and closing) as the greatest area of potential for APIs and Chatbots. Lenders also saw potential for using APIs in paying taxes and insurance from escrow accounts.

Armed with that and other research, Bhogarajhu said Fannie Mae had to act--and lead. "This is the direction that our customers want; we have to have modern methods," he said. "Fannie Mae has been in the forefront of the market. With Day 1 Certainty, we‘ve been moving away from a paper-based model and pushing technology. We want to be known for putting together the best and most modern technology for our customers."

Addagarla agreed. "That's the whole idea--we have seen lots of adoption of APIs in other industry. It's been slow coming in the mortgage industry. But since it lowers costs for customer and provides better speeds; in this day and age customer experience is everything."

Last year, Fannie Mae created a Developer Portal (, which provides users with a catalog of services.

The Portal, Addagarla, noted, "is a mechanism for our customers to see all our capabilities. In the traditional model, you had to search across our website to discover integrations we offered. Depending on the interface, you may see a specification but you would likely need to make a call. The specifications and connection methods differ from interface to interface requiring meetings to discuss the specific interface and how to connect. Following these calls, several iterations of development and testing occur to validate the integration. With APIs, customers come to the portal, access our offerings in one place, click on the API and view the technical aspects. All APIs are aligned to common standards (OAuth security, RESTful methods and JSON data structure) for a common experience. In the previous world, you coded it and it went out. Now, the coding mechanism is much faster. Integration is very fast."

The Developer Portal had a "soft launch" last year; and at the Mortgage Bankers Association's Annual Convention & Expo this month in October Fannie Mae showcased the next iteration with more features.

"Fannie Mae is making a conscious movement toward leveraging APIs for system integrations to support growing market demand," Bhogarajhu said.

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