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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
Cash Management
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
Loss Mitigation
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
Liquidation Efficiency
Workout Effectiveness
  6-Month Performance
  12-Month Performance
  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
Data Integrity
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
Cash Management
  • Shortage Percentage – The cumulative total of each day's cash shortage amount expressed as a percentage of the total due for the period.
Data Integrity and Operational Management
  • Percent Hard Rejects Over 90 Days Old – The number of loans that have edits to be cleared that are outstanding greater than 90 days expressed as a percentage of the total loans in the Servicer's portfolio for that period.
  • Percent Soft Rejects Over 90 Old – The number of loans that have system cleared edits for greater than 90 days expressed as a percentage of the total loans in the Servicer's portfolio for that period.
  • Percent of Hard Rejects Which Occurred in Reporting Cycle to Total Loans in Portfolio – The number of loans that have initial edits to be cleared and require the Servicer to correct the transaction expressed as a percentage of the total loans in the Servicer's portfolio for that period.
  • Percent of Soft Rejects Which Occurred in Reporting Cycle to Total Loans In Portfolio – The number of loans that have system cleared edits expressed as a percentage of the total loans in the Servicer's portfolio for that period.
  • Percent of Ending Hard Rejects to Total Loans in Portfolio – The number of loans that have edits to be cleared that were not corrected by the Servicer prior to cycle close expressed as a percentage of the total loans in the Servicer's portfolio for that period.
  • Average Number of Days to Report Payoffs – The average number of days to report a payoff to in the reporting cycle.
Default Management Criteria
Loss Mitigation
  • Transition to 60+ – The number of loans that roll from a less than 60 day delinquent status to a 60+ day delinquent or loss liquidation status over a three-month reporting period.
  • 60+ to Worse – The number of 60 day delinquent loans at the beginning of the month that migrated to a 90+ delinquent or loss liquidation status at the end of the month divided by the beginning 60-day delinquent loan count.
  • 90+ to Better – The number of 90+ day delinquent loans at the beginning of the month that transitioned to a less or equally delinquent status divided by the beginning 90+ days delinquent loan count.
  • 90+ to Worse – The number of 90+ delinquent loans that transition to a further state of delinquency in the following month divided by the total number of 90+ delinquent loans in the previous month. This criterion excludes loans in an active foreclosure or trial plan status.
  • Retention Efficiency – The number of retention workouts closed over a three-month period divided by the average 90+ day delinquent population for the same measurement period. Initiated trial modifications, closed modifications not requiring a trial period, and completed repayment plans for loans that were 60 days or more delinquent will be considered in the numerator.
  • Liquidation Efficiency – The number of liquidation workouts closed over a three-month period divided by the average 90+ day delinquent population for the same measurement period. Pre-foreclosure sales and deeds-in-lieu of foreclosure, including Home Affordable Foreclosure Alternatives (HAFA), will be considered in the numerator.
Workout Effectiveness
  • 6-Month Performance – Measures the number of loans that are current six months after the modification closing date.
  • 12-Month Performance – Measures the number of loans that are current 12 months after the modification closing date.
  • Timing of Liquidation Solutions – The number of closed pre-foreclosure sales and deeds-in-lieu of foreclosure that were less than 210 days delinquent at the time of closing divided by the total number of pre-foreclosure sales and deeds-in-lieu of foreclosure closed for the month.
Default Timeline Management
  • Loans Beyond Foreclosure Sale Threshold – Number of 180+ days delinquent loans and loans that liquidated at 180+ days delinquent that have exceeded the allowable published foreclosure state standard divided by the total count of loans that are greater than or equal to 180 days delinquent or were greater than or equal to 180 days delinquent at the time of liquidation. Liquidations include pre-foreclosure sales, deeds-in-lieu of foreclosure, and completed foreclosure sales.
  • Average Age of Past Foreclosure Sale Standard – Average age of 180+ days delinquent loans and loans that liquidated at 180+ days delinquent that are beyond the published allowable foreclosure state standards.
Data Integrity and Operational Management
  • Initial Delinquency Reporting Edits – The number of edits in the first monthly default reporting transmission compared to the total number of 30+ delinquent loans in the Servicer's portfolio.
  • Final Delinquency Reporting – The number of edits that have not been resolved plus the number of 90+ delinquent loans and loans in foreclosure that have not been reported as of the close of the cycle compared to total number of 30 + delinquent loans in the Servicer's portfolio.
  • Accuracy of DDLPI Reporting – The percentage of the Servicer's 30+ delinquent loans reported with DDLPIs that are inconsistent with the DDLPI information reported via loan-level reporting.
  • Timely REO Notification – The average number of days to report foreclosure sale results from the first business day after the sale date to the date the Servicer reports the sale results.

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.

Upcoming Preview

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:

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