Fannie’s Servicers Stuck at Above Median Performance

Even best-performing Fannie Mae loan servicers are not yet worthy of four- or five-star quality recognition.

Fannie Mae’s Servicer Total Achievement and Rewards program gave servicers a passing grade for improvements in the delivery of home retention solutions in 2012. The scorecard shows most of the roughly 34 servicers monitored by Fannie received a three STAR designation on a five STAR scale.

EverBank, GMAC Mortgage (Ally Bank), Green Tree Servicing, Nationstar Mortgage, PHH Mortgage Corp., Seterus Inc. and Wells Fargo Bank achieved a three STAR designation for “at or above median levels” of servicing quality.

Visibly absent from the first peer group that includes the largest servicers of Fannie loans are JPMorgan Chase and Citigroup, which at yearend 2011 had improved their servicing quality, according to STAR.

From the second peer group Fifth Third Bank, Regions Bank and RBS Citizens NA also received a three STAR designation.

The good news is that a larger number of servicers have achieved above-median results indicating servicers are on the right track.

The bad news is that since the program was launched in February 2011 not one of the servicers reviewed has ever qualified for a four STAR designation yet, let alone five STAR, which implies “superior performance.”

The final results for 2012 will be available to the public in April “when the 2012 STAR operational assessments are complete,” a Fannie spokesperson told this publication.

Fannie does not reveal the full list of servicers in the STAR scorecard because the purpose here is to recognize those who are performing better, he said. Fannie uses other means to address issues with servicers who are not performing very well right now.

The program compares a servicer’s performance with peers based on customer assistance such as foreclosure prevention and operational processes, including policies and technology.

Servicers must demonstrate consistent and standardized processes to earn a three STAR designation; and repeat above-median outcomes and reach credit loss targets to earn a four STAR designation.

Nonetheless, Leslie Peeler, SVP of Fannie Mae’s national servicing organization, said data so far show improvements across the board from top and bottom performing servicers, indicating they “understand the importance of delivering solutions directly to homeowners.”