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.

Category: Federal Reserve, Foreclosures

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

5 Responses to “Fannie Mae Launches STAR Servicer Accountability Program”

  1. Petey Wheatstraw says:

    These things jumped out at me:

    “Top-ranked servicers will be eligible to receive incentive awards and recognition.”

    and;

    “Incentivizing for good behavior, penalizing for bad behavior.”

    Why should good behavior by a corporation be rewarded? Isn’t good behavior an ethical assumption? The only incentive for good behavior a corporation should need is fear of harsh punishments and penalties should they decide to behave badly. Sadly, that’s not happening.

    As Matt Taibbi pointed out in his recent Rolling Stone article, “Why Isn’t Wall Street in Jail?”:

    “You put Lloyd Blankfein in pound-me-in-the-ass prison for one six-month term, and all this bullshit would stop, all over Wall Street,” says a former congressional aide. “That’s all it would take. Just once.”

    One good ass-pounding would set the world right.

  2. DeDude says:

    I sure hope the incentive program comes with a whip. That is if you fall below a certain level of performance and fail to correct within a given warning period, you get kicked out of mortgage servicing. The financial incentives for good behavior will never exceed the rewards for bad – so we need more than that.

  3. LOL – totally agree – if there aren’t real economic incentives (or jail time) then corporate behavior will (and did) run unchecked. It’s like posting the 55mph speed limit signs on the Interstate.

  4. louis says:

    Is this like having Moody’s rate mortgage backed securities?

  5. AHodge says:

    under our new transparency program
    we will name and rank the very best…?