Freddie Mac has announced its Servicing Success Program, an approach that the government-sponsored enterprise (GSE) finds robust and balanced in its approach to setting performance expectations, providing feedback on servicer strengths and weaknesses, and promoting a dialogue with servicers to improve portfolio performance and preserve homeownership. The Servicing Success Program is scheduled to take effect for all Freddie Mac servicers on Aug. 1, 2011.
The Program evaluates servicer performance in investor reporting and remitting and default management. The Servicing Success Program's performance criteria are designed to better align with Freddie Mac business objectives in the current environment and help servicers more effectively assess their progress. The Servicing Success Program combines a servicer scorecard and loan file reviews plus, for larger servicers, individualized requirements and Servicing Account Plans that set objectives and goals to reduce costs and preserve homeownership.
"Today's announcement marks the beginning of a significant advance in the scope and sophistication of servicer performance management," said Tracy Mooney, senior vice president of single-family servicing and real estate-owned (REO) properties for Freddie Mac. "The robust, balanced approach we are launching in 2011 underscores Freddie Mac's commitment to invest in the future of U.S. homeownership by strengthening servicing practices and enabling servicers to more effectively preserve homeownership."
A new ranking system will be tied to the Servicing Success Program's criteria and weightings which will replace Freddie Mac's traditional performance tiers. Freddie Mac will now provide each servicer with a monthly ranking based on the performance points it earned the prior month so it can see its overall performance relative to its competitors.
Before the close of 2011, Freddie Mac plans to announce a companion Servicer Success Rewards and Remedies component that will integrate the Servicing Success Program with the Servicing Alignment Initiative Freddie Mac is undertaking with Fannie Mae at the direction of the Federal Housing Finance Agency (FHFA).