Barry is taking a well needed break but I’m certain he’s never far from his laptop. He asked me to drop in occasionally so please be patient with me.
Today Fannie Mae announced the “STAR Program” to measure servicer performance that they hope will provide more transparency.
A key component of the STAR Program is the Servicer Performance Scorecard, which provides monthly performance snapshots and trends for key performance indicators to help servicers effectively assess their progress. Top-ranked servicers will be eligible to receive incentive awards and recognition. Rankings of top performers will be made available to the public in an annual scorecard.
Looking back to Fed Governor Tarullo’s testimony on mortgage servicing before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate, Washington, D.C. on December 1, 2010…
Because mortgage servicers maintain the official accounting of all amounts paid and owed by borrowers, they serve as the critical link between borrowers and mortgage holders. In addition, servicers manage loan defaults, including the negotiation of loan modification and repayment plans with borrowers.
Enforced loan servicer standards are needed but this feels like an honor system despite claims of creating “transparency.” The largest banks comprise the who’s who list of loan servicers with a built-in conflict of interest and therefore will continue to be a key stumbling block to mortgage mods and a more responsible foreclosure process for a while.
Now that the regulators are awake, it’s weird that Fannie comes out with this program as an enforcement action against most of largest is under way (sorry, American Banker subscription). Regulators hope this will send a message for servicers to clean up their act.
Incentivizing for good behavior, penalizing for bad behavior. All in the same week.
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