Buried in a release for Servicing Management Default Underwriter, the government-sponsored enterprise included this quote, “So far, adoption has been voluntary and we are pleased a number of leading technology providers and servicing partners have implemented SMDU,” said Leslie Peeler, senior vice president of Fannie Mae’s national servicing organization. “Servicers should anticipate that adoption will be required at some point in the near future.”
Servicing Management Default Underwriter is a tool that helps mortgage servicers work faster and more consistently with homeowners to prevent foreclosure. Among the lenders using the platform are Nationstar Mortgage, PHH Mortgage and Quicken Loans. Technology providers using the platform include LPS and Overture Financial Solutions among others.
The merits of the technology aside, what caught my eye was the unabashed nod to its glory days: Fannie Mae will let servicers “choose” to deploy the technology before requiring that servicers adopt it. I did not think that it wielded that sort of power any more. But, apparently, I was wrong.
Soon the edict will come, and the government-sponsored enterprise wants all of us to know it. Meanwhile, if this release is an indication, efforts to ensure that the market is diversified, privatized, and more transparent than during the bubble years, have fallen short.
While compelling lenders to do something has never sat well with them, it seems Peeler’s quote rings in a return of the old brazen Fannie Mae when it sat smugly next to Freddie Mac at the top of the mortgage food chain.
Those were the years before the bubble burst. Before Fannie Mae and Freddie Mac became wards of the state, and could routinely force lenders to do business their way. But even then, when Fannie Mae was at the peak of its power, edicts were delivered in whispered tones, behind closed doors to a lucky, privileged few.
Those, with whom they were shared, did not discuss them. They had too much to lose. To be sure, Fannie Mae did not discuss them publicly, much less put out a press release confirming its intentions, leaving no wiggle room, no plausible deniability for the future. The old Fannie Mae could be ruthless at times, but it also was shrewd about exercising power, and smarter about its public persona than today’s executive team seems to be.
Of course, markets participants that know that using default underwriting will be required will integrate with the system and ensure that it’s operating properly in advance of the time when its use is required. That will enable Fannie Mae to claim that no one was compelled to use the system.
I suspect that the bold pronouncement is Fannie Mae’s way of letting the mortgage industry know not to look for further acts of contrition, no matter how much money taxpayers spent to bail it out. It’s made peace with past failures. Now it’s back to the business of cutting the knees out from under lenders—if it means a few extra dollars for its own coffers.
Once again, all sectors of the mortgage business will have to be ready for decrees from Fannie Mae. Today the edict targets servicers and technology providers. Tomorrow it may be originators. The day after, it may be another sector of the mortgage business.
It feels like old times.
Welcome back, Fannie Mae.
Matt Strickberger is the managing partner of OnPoint PR and Consulting LLC, a public relations firm that represents lenders, servicers, technology companies and others. He was editor of Mortgage Technology magazine from 1997-2000. If you have comments or suggestions for future columns, email him at firstname.lastname@example.org.