Our First CSO Meeting
At our customer conference last month, we held the first-ever meeting of chief servicing officers. We call them “CSOs,” but they are much more than an acronym. This is a group of industry leaders, coming together for a common purpose: determining the best way to implement a servicing standard for multifamily finance. And the discussion was robust.
I began the meeting by underscoring the important role CSOs play when it comes to borrower consent requests on performing loans. This process used to be multi-layered, sequential and timing consuming. Primary and Master Servicers, along with Freddie Mac Multifamily, would go back and forth on data, forms and even the rules for approving these requests. What a mess!
Now, CSOs are eliminating all this inefficiency and confusion. As single points of accountability within a Primary Servicer, CSOs vouch for the completeness, accuracy and compliance with our servicing standard of any one request. And nothing goes to a Master Servicer until the CSO has done his or her job. What a big step forward for speed and accuracy, I told the group.
Next, we did a quick update on work we have done to solidify our servicing standard in the marketplace. Certainly, having Primary and Special servicers designate CSOs is an important step forward. But, since our conference last year in Chicago, we also have:
- Unified the role of legal counsel. Rather than multiple law firms representing the various servicing parties, our standard calls for a single firm to represent the interests of the trust, and to do so on a bedrock of best practices and transparency.
- Simplified the fee structure. We eliminated small, post-funding fees, with Freddie Mac Multifamily providing offsetting compensation to Servicers.
- Streamlined the review process for consent requests. We eliminated the need for Special Servicers to be in the approval path, and now Master Servicers provide borrower consent packages directly to Directing Certificateholders.
- Increased our availability. Whether it is better clarifying our servicing standard, or playing quarterback for multi-loan requests, we have been aggressive in our outreach.
- Enhanced the Consent Request Tracker (CRT) tool. Nowhere else in the industry is there a workflow and reporting tool like CRT. What began as a rudimentary pipeline report now is a web-based application that gets more comprehensive in scope and easier to use.
We have built a servicing standard through common forms, underwriting rules, efficiency, outreach and transparency. But so much of our effectiveness depends on CSOs. They are the lynchpin that allows our borrowers to want to use securitization as a funding path. And the greater use of securitization is critical to financing the growth in rental housing.
There’s still a lot of work to be done. That’s why I look forward to our next CSO meeting.
Discussions on owning or renting a home, the housing market and housing finance.