Fannie Mae to start grading mortgage servicers
Fannie Mae will launch a new program for evaluating the performance of its mortgage servicers over the next 30 days.
The Servicer Total Achievement and Rewards (STAR) program will gauge how servicers support the housing recovery and keep homeowners out of foreclosure. Fannie made the announcement at the Mortgage Bankers Association Servicing Conference & Expo in Dallas Wednesday.
Freddie Mac executives said it was finalizing a revamp for how it measures the performance of its servicers Wednesday as well. But their changes won't be fully implemented until the third quarter of 2011.
Servicers came under scrutiny following procedural problems that involved documentation errors and even short cuts in the foreclosure process, known as the robo-signing scandal. It touched off a series of investigations from federal regulators and attorneys general in all 50 states.
Fannie and Freddie's regulator the Federal Housing Finance Agency announced that it was working with those regulators to put together a new national mortgage servicing standard for the industry that would revamp how these companies are paid for servicing troubled loans.
Leslie Peeler, Fannie's vice president of servicing portfolio management, said the STAR program was created to promote transparency and to recognize those servicers that performed well.
Fannie will implement a scorecard similar to the one that will be used by Freddie. It provides monthly performance reports that notifies servicers on what they should work on. Top-rated companies will receive incentive rewards and recognition that will be made public.
"The efforts of servicers are critical to preventing foreclosures and providing homeowners assistance," Peeler said. "By creating measurable expectations for our servicers aligned with Fannie Mae's business objectives, we hope to sharpen servicers' focus and encourage them to continue to work with us toward our shared priority: keeping people in their homes."
Jay Bray, executive vice president of one of Fannie's servicers Nationstar Mortgage, said in the announcement that he supported the new assessment and rewards program.
"The STAR Program is an innovative approach in managing and evaluating mortgage servicers' performance, and we believe it will improve customer satisfaction and overall housing outcomes for struggling customers," Bray said.
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