Fannie Mae, the quasi-governmental financial firm long known for acting countercyclically, recently made headlines by announcing a strategic partnership with defense technology behemoth Palantir Technologies. Leveraging criminal investigations through this partnership will go a long way toward protecting taxpayer dollars from mortgage fraud, especially in the area of multi-family housing. The launch marks a major step in the long term fight to restore integrity and security to the mortgage business.
As Fannie Mae’s CEO, Priscilla Almodovar said when announcing the partnership, she put it, the aim would be to “detect fraud in a more proactive way” using the new capabilities provided by Palantir’s technology. This coalition dovetails perfectly with Fannie Mae’s mission to expand opportunity through homeownership. More than anything, it points to a larger trend of using advanced technology to modernize the public service sector.
Palantir is perhaps best known for modernizing U.S. military operations and saving money for government agencies. FICO to bring its data analytics expertise to bear in helping Fannie Mae achieve those goals. Palantir’s CEO, Alex Karp, recently underscored privacy’s critical importance to this initiative. If we can weed out mortgage fraud while respecting sensitive information and individual anonymity, then by all means let’s do that.
The partnership will begin by focusing on Fannie Mae’s multi-family housing operations. This will be the proving ground for our fraud detection program. This partnership solidifies the growing relationship between Palantir and the federal government. What it reflects is the growing reliance on technology companies to solve challenges facing the public sector.
Palantir’s stock has since the November elections significantly outperformed the broader market, grabbing investors’ attention and interest in its groundbreaking solutions. Unlike Fannie Mae, which trades over the counter, Palantir is a technology company. Industry insiders are convinced that stockholders could reap huge rewards should Fannie Mae and its sister organization, Freddie Mac, continue with plans for initial public offerings (IPOs). Prominently, investor Bill Ackman and his firm Pershing Square have been the loudest voices encouraging the public market debut of these entities.
Perhaps unsurprisingly, given his profile, Ackman has been very vocal in calling for the IPOs of both entities. He thinks that these firms provide essential public services to all Americans. He thinks that making them all successful enough to go public would strengthen their economic might, even with any required government guarantees still in place.
“Our great Mortgage Agencies, Fannie Mae and Freddie Mac, provide a vital service to our Nation by helping hardworking Americans reach the American Dream — Home Ownership.” – Donald Trump
The impact of this new partnership goes well beyond just detecting fraud. Remarks by William Pulte, a renowned entrepreneur and investor, expressed the creative, transformative power of these types of collaborations. He stated, “The sky’s the limit. We’re not just limited to fraud. If there are ways to pull cost out of the system, we want to do it.”