Freddie Mac urged its mortgage servicers to reach borrowers early on in delinquency if they want to score higher in upcoming evaluations.
In February, Freddie announced it will use a new scorecard to measure how its mortgage servicers perform beginning in the third quarter. The change is part of a wider revamp of how Freddie will manage its 1,400 servicing companies and monitor how they put troubled mortgages through the loss mitigation process.
Freddie Executive Vice President Anthony Renzi will oversee the new initiative. In a blog post Wednesday, Renzi said the government-sponsored enterprise is putting more emphasis on keeping 30-day delinquent loans out of the 60-day or 90-day buckets.
The serious delinquency rate on Freddie Mac's books has been on the decline over the past few months, dropping to 3.82% as of January.
"Over 60% of the emphasis in our new scorecard will be based on how servicers organize themselves to support early borrower contact and get to a foreclosure alternative – for example, by ensuring their call centers, email/chat centers and mail response centers are adequately staffed and supervised so workflow patterns are tightly controlled," Renzi said.
The other 40% of the scorecard will gauge how servicers report data, manage the default timeline and other administrative processes.
Renzi said his staff plans to sit down with servicers and set individual objectives for keeping as many homes as possible out of foreclosure. Freddie will review servicing files afterward to monitor how these companies use staff, processes and systems to reach those goals.
One of the main criticisms of how the government responded to the foreclosure crisis is its constant reluctance to set specific goals for servicers, whether they handle Fannie Mae and Freddie Mac loans or participate in the Home Affordable Modification Program.
"As perhaps the single most important element of our new, balanced approach, the file reviews are where the right questions are asked," Renzi wrote. "Did they work to avoid foreclosures or, if a foreclosure referral occurred, give the borrower time to take action that would avoid the final foreclosure sale? If not what are the issues and what will it take to achieve our mutual goals?"
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