Upcoming Changes to Your Servicing Performance Criteria and Measurements
October 3, 2012
How well you service Freddie Mac mortgages is important us, to you, and to the homeowners whose loans you service. You can tell from your Freddie Mac Servicer Success Scorecard rankings how well your servicing meets our servicing requirements. You can also clearly see which servicing activities we believe have the greatest consequence in the current housing market by the weights we assign to each criterion.
Soon you will have even greater insight into your servicing performance for significant servicing activities because we will expand the performance criteria in your Scorecard on January 1, 2013. Working in concert with the Federal Housing Finance Agency and Fannie Mae, there will be common performance criteria and standards so you can focus your attention on the servicing outcomes that rise to the highest level of importance. You can find complete details in Single-Family Seller/Servicer Guide (Guide) Bulletin 2012-20.
How Will Your Scorecard Change?
Your Scorecard will still contain criteria for Investor Reporting and Default Management. There will be 22 performance criteria; most will be similar to an existing performance criterion.
In aggregate, you will be measured and held accountable against common performance criteria consistently across your GSE servicing portfolios for unacceptable performance. With this revised set of common performance standards and measurements, you can easily see whether your performance is meeting our servicing requirements. If your performance dips in a particular area and could be in danger of triggering a corrective remedy, you may be given the ability to take proactive corrective action.
The following tables compare the current criteria to the future criteria.
- Investor Reporting Criteria
|Current Criteria||Future Criteria|
|Shortage Percentage||Shortage Percentage|
|Custodial Account Review|
|Data Integrity and Operational Management|
|Percent of Aged Applied Transactions in Error||Percent Hard Rejects* Over 90 Days Old|
|Percent Soft Rejects** Over 90 Days Old|
|Percent of Applied Transactions in Error||Percent of Hard Rejects* Which Occurred in Reporting Cycle to Total Loans in Portfolio|
|Percent of Soft Rejects** which Occurred in Reporting Cycle to Total Loans In Portfolio|
|Percent of Ending Hard Rejects* to Total Loans in Portfolio|
|Average Age of Days to Report Payoffs||Average Number of Days to Report Payoffs|
*Hard Rejects are outside of system tolerance and are not automatically cleared; Servicer intervention is required to correct a hard reject.
**Soft Rejects are within system tolerance and are automatically cleared by the system; Servicer intervention is not required to correct a soft reject.
- Default Management Criteria
|Current Criteria||Future Criteria|
|Early Collections Roll Rate||Transition to 60+|
|60+ to Worse|
|90+ to Better|
|Late Collections Roll Rate||90+ to Worse|
|D60+ Workout to D60+ Inventory||Retention Efficiency|
|Timing of Liquidation Solutions|
|Default Timeline Management|
|D90+ Loans Past Foreclosure Referral Standard|
|Loans Beyond Foreclosure Sale Threshold|
|Inventory Past Standard||Average Age of Past Foreclosure Sale Standard|
|Initial Electronic Default Reporting (EDR) Edits||Initial Delinquency Reporting Edits|
|6th Business Day EDR Edits||Final Delinquency Reporting|
|Accuracy of Due Date of Last Paid Installment (DDLPI) Reporting||Accuracy of DDLPI Reporting|
|Average Days to Report Foreclosure Sales||Timely REO Notification|
Each criterion will contribute a certain percentage to your overall servicing performance. You will be notified when the weighted percentages assigned to each criterion are available. While the GSEs have consistent measurements and performance criteria, we will have different weights, targets, and evaluation thresholds. This stems from differences between our portfolio composition, asset management strategies, and other business drivers in the marketplace.
What Does Each Criterion Mean?
Each new criterion is defined as follows.
|Investor Reporting Criteria|
|Default Management Criteria|
To review the calculation for each criterion, refer to Attachment A of Guide Bulletin 2012-20.
Custodial Account Review Results
Your Custodial Account Review results will no longer be part of your Scorecard, but will be considered in evaluating whether your overall performance is unacceptable for purposes of Guide Section 5.2, Disqualification or Suspension of the Seller/Servicer.
The new performance criteria become effective January 1, 2013, and you can see your first Scorecard using the new performance criteria to evaluate your January servicing performance on March 7, 2013. In a future preview of the Scorecard, you can see how your current servicing performance would rank using the new criteria. Be sure to watch for a notification of this preview later this year.
Get More Information
For more information on the Servicer Success Scorecard: