Fannie's Top Servicers Barely Making Satisfactory Grade

Of the 11 largest servicers evaluated through the Fannie Mae Servicer Total Achievement and Rewards program, only CitiMortgage, Everbank, GMAC Mortgage (Ally Bank) and Wells Fargo made a satisfactory grade in the third quarter.

Among the banks that did not qualify for Fannie’s STAR program Peer Group One satisfactory performance list but are nearly there include JPMorgan Chase Bank and PHH Mortgage Corp., which according to Fannie, “demonstrated improvements.”

STAR is designed to evaluate mortgage servicers' contribution to the housing recovery through foreclosure prevention measuring their performance based on the number of Fannie loans they service.

STAR’s Servicer Performance Scorecard provides monthly performance snapshots and progress assessments that allow for annual ranking based incentive awards and recognition.

Scorecard metrics include the volume of foreclosure alternatives such as loan modifications provided during a time period.

Of the nine servicers in Peer Group Two, Aurora Bank, Central Mortgage Co., Fifth Third Bank, The Huntington National Bank and Regions Bank made the list.

STAR links servicer performance to the homeowners helped and their experience with their servicer using measurable servicer expectations aligned with Fannie's business objectives that promote transparency and accountability, said Leslie Peeler, VP of servicing portfolio management.

By the end of the second quarter Fannie listed almost the same Peer Group One and Two servicers as being on track to achieve at least an “overall satisfactory” for 2011.

GMAC Mortgage (Ally Bank), CitiMortgage Inc., Everhome Mortgage, Wells Fargo Bank NA for Peer Group One, and Fifth Third Bank, The Huntington National Bank, HSBC Mortgage Corp. (USA), Aurora Bank, FSB, Regions Bank, Central Mortgage Co. for Peer Group Two.

The program’s 5-STAR scale rating considers “overall satisfactory” operational assessments of at least three stars. The 3-STAR rating indicates a servicer has accomplished at least median performance relative to peers, 4 STARs show the servicer is performing above the median level an is on track to meet Fannie Mae targets, and 5 STARs show the servicer is meeting or exceeding Fannie Mae's targets.

Fannie plans to publish its annual 2011 overall STAR ratings early in 2012, which will round up the monthly scorecard outcome, operational assessments across key business lines, and patterns from 10 key performance indicators that focus on the servicer's track record in delivering sustainable solutions.

What happens to servicers that do not perform at satisfactory level? They simply do not receive a STAR rating.