Freddie Mac Introduces New Audit Structure and New Performance Review Process for Program Plus and Targeted Affordable Housing Seller/Servicers in 2012
November 29, 2011
Freddie Mac is introducing a new audit structure for 2012 that requires all Program Plus and Targeted Affordable Housing Seller/Servicers to be audited on an annual basis. In addition, we will also now provide you with an annual Seller/Servicer Performance Review that replaces the former Scorecard, and will correlate with the timing of this new audit structure.
This new structure is designed to gain efficiencies and address your feedback by providing your company with more qualitative analysis that you can implement as best practices in the future.
The Audit Process
The audit process will consist of undergoing an on-site, Full Scope Audit at least every three years and an electronically conducted, Limited Scope Audit in the other years:
Full Scope Audit – a detailed collection, evaluation and comprehensive review of your compliance to our requirements, just as in previous years.
Limited Scope Audit – a streamlined review process where all requested information is submitted through our Document Management System (DMS). The scope of this audit depends on the results of your last audit and performance issues.
The type of audit your company will go through in 2012 will depend largely on the amount and type of business it originates, the size of its portfolio and additional risk factors. Your company audit will include an overall assessment of its compliance with our eligibility standards and the Freddie Mac Multifamily Seller/Servicer Guide. All business areas will be represented during both types of audits.
In place of sending a Scorecard in January 2012 with 2011 results, Freddie Mac's Customer Compliance Management (CCM) will soon be sending a letter to confirm the date and time of your company's scheduled audit and performance review. To enable us to successfully plan and align the timing of the audit and performance review processes, we ask that you give importance to coordinating the meeting on this date. This scheduled audit in 2012 will cover the past 12 months of performance.
The Performance Review
After your company has been through either type of audit in 2012, it will receive an Audit Report as well as a detailed assessment of its performance review. If your company is scheduled to go through a full scope audit, we will present the performance review in person while onsite. If your company goes through a limited scope audit, we will provide the option to have the performance review presented via conference call or personal visitation. For both types of audits, all Multifamily business areas will be represented for communication. Our approach is designed to enable an effective dialogue between us as part of our overall emphasis on customer accountability. The performance review will consist of four areas – Production and Underwriting, Final Delivery, Servicing and Asset Management and Investor Reporting – and include items such as:
- Overall Production Goals
- Actual Production
- Current Production Ranking
- General Quality of Representation
- Quality of Loan Closings/Fundings
- Financial Reporting
- Post Purchase Borrower Requests
- Timeliness and Accuracy of On-going Requests
- Payoff Rating
- Actions Agreed to During Last Performance Review
Your performance review results will include actionable steps from both parties on how to improve our partnership, and we will track and measure this against next year's review.
Post Transaction Surveys & Goal Letter
In relation to these process changes, we're also making some changes to our customer feedback surveys. We're eliminating the Post Transactions Surveys for Seller/Servicers, and replacing that survey approach with a broader customer survey every 9 months. We expect this change in approach will provide us with more actionable information and reduce the demand on you to complete more frequent surveys. You will still receive ongoing transactional feedback through our current delivery package ratings.
Internally, we are temporarily suspending our Post Transaction Surveys provided to production and underwriting during the fourth quarter of 2011 but will resume the internal feedback process at the transaction level in 2012.
This new process will not affect your annual Goal Letter, which you will receive in January 2012.