Modernizing GSE Investor Reporting Should Be a Strategic Priority for Credit Unions

Guest Editorial by Susan Graham, President and CEO, FICS

Credit unions face a unique challenge in today's mortgage market. They must maintain the personal, member-focused service that defines their mission while meeting increasingly complex regulatory and investor reporting requirements. As Government Sponsored Enterprises (GSEs) like Fannie Mae and Freddie Mac continue modernizing their data standards and reporting requirements, credit unions must ensure their mortgage servicing software can keep pace without compromising compliance requirements. The stakes are particularly high for credit unions. Unlike the largest national banks that can absorb compliance costs across hundreds of thousands of loans, credit unions must balance technology investments with their commitment to member value.

Susan Graham

The GSEs have embarked on ambitious multi-year initiatives to modernize their data collection and reporting requirements. For example, Fannie Mae has announced a multi-year initiative that signals a fundamental shift toward real-time, event-based reporting with expanded data attributes that align with MISMO data standards for various servicing events. Credit unions servicing loans sold to the GSEs must ensure their servicing processes and software can handle these updates quickly and accurately while maintaining the personal touch that members expect.

The Evolving GSE Reporting Landscape

The core GSE reporting requirements remain consistent but are becoming more sophisticated, requiring greater precision and real-time capabilities. For example, servicers must accurately report all payment activity, including partial payments, prepayments, and payment application timing with enhanced granularity. They must also calculate daily and monthly funding requirements and report accurately to avoid costly discrepancies that can strain investor relationships.

Servicers must also identify and resolve reporting or drafting discrepancies quickly to maintain investor confidence and avoid penalties. Precise reconciliation of custodial accounts ensures proper fund management and regulatory compliance while supporting audit requirements.

Beyond these standard reporting functions, the GSEs increasingly require detailed documentation of loss mitigation activities, modification programs, and borrower assistance efforts. This expanded scope means credit unions need systems capable of capturing, organizing, and reporting on a much broader range of servicing activities than ever before.

Current Market Pressures Intensify Technology Requirements

The 2025 mortgage market presents unique servicing challenges that make robust technology more critical than ever. According to BankRate, the average rate for a 30-year fixed-rate conforming mortgage loan hovered around 6.30% in September 2025. While rates have declined from 2022-2023 peaks, they remain elevated enough to create payment stress for some borrowers, requiring more sophisticated loss mitigation tracking and reporting capabilities. The Mortgage Bankers Association (MBA) reported that in Q1 of 2025, delinquency rates increased to 4.04% of all loans. While this is historically low, it represents a 10 basis point increase from a year ago.

These market conditions create a dual challenge for credit unions. Members facing payment difficulties need more personalized assistance, which is the kind of service credit unions excel at providing. However, each intervention must be documented and reported to GSEs with increasing detail and frequency. Without the right technology infrastructure, credit unions find themselves choosing between thorough member service and accurate investor reporting.

Why Core Processing Systems Fall Short for Modern GSE Requirements

Many credit unions rely on their core processing systems to handle mortgage servicing, but this approach creates significant limitations when dealing with contemporary GSE reporting demands. Core systems often lack the specialized mortgage functionality for complex investor reporting requirements. Without purpose-built mortgage servicing capabilities, credit unions frequently resort to manual processes for investor reporting, loan modifications, compliance tracking, and even some of the basic servicing functions.

This manual approach proves costly in multiple ways. Processing errors become more frequent, requiring time-consuming corrections that can damage investor relationships and result in penalties. More importantly for credit unions, staff spend valuable time on repetitive administrative tasks rather than building member relationships and providing the personalized service that distinguishes credit unions from other types of financial institutions.

The disconnect between core processing system capabilities and GSE requirements also creates compliance risks. When reporting processes rely on manual data entry and spreadsheet manipulations, the likelihood of errors increases substantially. These errors create operational inefficiencies and can result in regulatory sanctions and damaged investor relationships.

Technology Solutions That Enhance Both Compliance and Member Service

Credit unions need specialized mortgage servicing software that transitions GSE reporting from a compliance burden to a strategic advantage for member retention by freeing up valuable staff time. The right technology platform should deliver comprehensive secondary market support while enhancing the member experience.

Essential capabilities include:

• Comprehensive GSE Reporting Functions: Systems that support all industry-standard reporting methods recognized in the secondary market, producing reconciliation, remittance, delinquency, prepaid, and trial balance reports according to chosen reporting methods. This automation ensures accuracy while freeing staff to focus on member service.

• Advanced P&I and T&I Management: Automated advance and recovery processing for Principal & Interest and Taxes & Insurance, ensuring precise calculations and timely investor remittances without manual intervention.

• Real-Time Data Integration: Immediate access to current loan information enables staff to respond instantly to member inquiries while ensuring all reporting reflects the most current data.

• API Integration Capabilities: Robust application programming interfaces (API) that enable seamless data exchange with third-party systems, allowing credit unions to leverage existing technology investments while enhancing servicing capabilities. APIs facilitate real-time communication between systems, reducing the manual data entry and improving accuracy across all connected platforms.

• Seamless Core System Integration: Technology that connects with existing core systems while providing specialized mortgage functionality, eliminating data silos and reducing duplicate entry that can introduce errors.

• Member-Focused Digital Tools: Self-service web applications that allow members to access real-time loan information and make payments while maintaining human touchpoints when assistance is needed.

The Role of AI in Modern Investor Reporting

Artificial Intelligence is transforming credit union mortgage servicing by optimizing operations, ensuring quality control, and maximizing efficiency. Modern AI-powered servicing solutions can identify and address critical operational gaps while maintaining the high-touch member service that defines the credit union experience.

AI capabilities in mortgage servicing include task management optimization to help ensure critical servicing activities aren’t overlooked. This also helps credit unions maintain consistent operational standards.

Quality control represents another significant AI application. Advanced systems can identify data or situations that may cause essential programs to negatively impact loan performance. This proactive approach prevents potential issues before they affect GSE reporting or member relationships.

AI also excels at providing servicing recommendations for loans with unique circumstances. This not only maximizes program effectiveness; it ensures all eligible members receive appropriate assistance.

Perhaps most valuable for credit unions is AI's ability to identify beneficial programs that servicers may not currently be running. By analyzing servicing patterns and loan characteristics, AI can recommend operational improvements that enhance both compliance and member service delivery.

Building for the Future

Technology drives every aspect of mortgage servicing today. From loan origination through the entire life of the mortgage, robust systems play crucial roles in operations, risk management, and regulatory reporting. Credit unions attempting to manage complex GSE requirements with inadequate technology compromise compliance and member experience.

The solution requires strategic investment in specialized mortgage servicing technology that facilitates adherence to changing regulatory and investor requirements. Credit unions should partner with vendors with proven industry records and established relationships with GSEs and other investors. This approach enables credit unions to streamline investor reporting, maximize operational efficiencies, and maintain a competitive advantage.

As GSE requirements continue evolving and operational demands increase, credit unions that invest in modern servicing technology position themselves to thrive in an increasingly complex regulatory environment.

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Susan Graham is president and chief operating officer of FICS (Financial Industry Computer Systems Inc.), a mortgage software company specializing in mortgage origination, residential mortgage servicing and commercial mortgage servicing software for mortgage lenders, housing agencies, banks and credit unions. FICS^® has delivered exceptional automation, performance, system support, and value for more than four decades. FICS’ software uses Microsoft .NET Framework and provides document management, API, and web-based capabilities in its full suite of products. For more information, visit www.fics.com.