February 22, 2017 Version 1 - ADFINET · 5.4 Operational Assessment Overview ... 6.1.2.2 Process...

STAR Reference Guide February 22, 2017

Version 1.3

Contents

1. Disclosures ............................................................................................................................... 4

2. Preface ....................................................................................................................................... 5 2.1 Introduction ................................................................................................................ 5 2.2 Program Rationale and Benefits ............................................................................. 7 2.3 Intended Audience..................................................................................................... 8 2.4 Document Organization and Structure .................................................................. 9

3. Servicer Total Achievement and Rewards (ST AR) Program ...........................................10 3.1 Program Overview .................................................................................................. 10 3.2 Servicer Inclusion Criteria...................................................................................... 11 3.3 STAR Recognition and Criteria ............................................................................. 13 3.4 Program Administration ......................................................................................... 14

4. STAR Performance Scorecard ............................................................................................. 15 4.1 Scorecard Overview ............................................................................................... 15

5. Servicer Capability Model (SCM) Framework and Methodology ....................................17 5.1 SCM Framework Introduction ............................................................................... 17 5.2 Business Architecture ........................................................................................... 18 5.3 SCM Framework Introduction ............................................................................... 19 5.4 Operational Assessment Overview ...................................................................... 22 5.5 Operational Assessment Process ........................................................................ 23

6. SCM – Organizational Overview and Shared Processes .................................................26 6.1 Organizational Overview and Shared Processes ...............................................26 6.1.1 Organizational Overview ....................................................................................... 27 6.1.2 Change Management .............................................................................................. 28 6.1.2.1 Project Management ............................................................................................... 29 6.1.2.2 Process Management ............................................................................................. 32 6.1.3 Risk Management.................................................................................................... 36 6.1.3.1 Operational Risk Management .............................................................................. 37 6.1.3.2 Compliance Monitoring and Oversight ............................................................... 38 6.1.3.3 Internal Audit............................................................................................................ 38 6.1.3.4 Business Continuity Management........................................................................ 39 6.1.4 People Management ............................................................................................... 41 6.1.4.1 Incentives Framework ............................................................................................ 41

6.1.4.2 Workforce Development Overview ...................................................................... 42 6.1.4.3 Training Effectiveness ........................................................................................... 43 6.1.5 Vendor Management ............................................................................................... 44 6.1.5.1 Vendor Selection ..................................................................................................... 44 6.1.5.2 Vendor Management and Oversight ..................................................................... 45

7. SCM –Business Processes ................................................................................................... 48 7.1 General Servicing ................................................................................................... 48 7.1.1 Investor Reporting and Accounting ..................................................................... 53 7.1.2 Loan Administration............................................................................................... 55 7.1.3 Customer Service ................................................................................................... 62 7.1.4 Collections ............................................................................................................... 68 7.2 Solution Delivery .................................................................................................... 75 7.2.1 Loss Mitigation Operations ................................................................................... 78 7.2.3 Retention .................................................................................................................. 81 7.2.3 Liquidation ............................................................................................................... 85 7.3 Timeline Management............................................................................................ 89 7.3.1 Bankruptcy .............................................................................................................. 94 7.3.2 Foreclosure............................................................................................................ 102 7.3.3 Property Preservation and Post Foreclosure Management ........................... 106

© 2016 Fannie Mae. Trademark of Fannie Mae 2.22.2017 3 | P a g e

1. Disclosures STAR Reference Guide Purpose The Fannie Mae Servicer Total Achievement and Rewards™ (STAR™) Program was created to provide consistent and specific servicing-related expectations for Fannie Mae’s servicers along with a framework for measuring servicer performance relative to those expectations. This Servicer Total Achievement and Rewards (STAR) Reference Guide (“STAR Reference Guide” or “Reference Guide”) serves as implementation guidance for servicers.

Conflict with Fannie Mae’s Servicing Guide or Contracts Servicers are responsible for complying with the Servicing Guide and applicable contracts, such as the Mortgage Selling and Servicing Contract (MSSC). In the event of any conflict between the Servicing Guide or any applicable contract and the terms of the STAR Reference Guide, the terms of the Servicing Guide or applicable contract shall control.

Program Updates The content of version 7.0 of the STAR Reference Guide governs the STAR Program for the 2017 STAR Program year. Fannie Mae may at any time update, rescind or amend any and all materials in the STAR Reference Guide. Fannie Mae will notify servicers of changes and updates to the STAR Reference Guide by email. Fannie Mae posts an electronic version of this Reference Guide on www.FannieMae.com and makes every effort to keep it updated with changes throughout the year.

Each servicer should ensure its leadership team, operation managers, and staff, as applicable, are familiar with the content.

Fannie Mae Use of Data Fannie Mae takes appropriate measures to safeguard servicer-provided data. Furthermore, servicer- provided data will not be attributed to a particular servicer without prior permission from the servicer.

Publication The documentation used for servicer reviews and operational assessments is considered to be “confidential information” for purposes of the Servicing Guide; however STAR results generated based on the servicer’s scorecard, servicer reviews and operational assessments may be made public by Fannie Mae.

When Questions Arise The STAR Reference Guide explains STAR Program parameters, details the Shared and Business Processes included in the operational assessment and provides recommendations for success.

If servicers have questions or feedback related to any section of the Reference Guide, they should contact their Portfolio Manager or may provide feedback directly to [email protected].


http://www.fanniemae.com/singlefamily/star

mailto:[email protected]

2. Preface

2.1 Introduction

The STAR Program supports the industry by establishing a transparent and formal framework to recognize our servicing partners for their competency, capacity, and overall performance. This performance management framework supports a comparative program designed to gauge relative performance. A key objective of the Program is to provide benchmarks that drive servicers to continually strive toward greatness.

There are certain elements that are shared across great organizations. Such organizations are customer- driven and actively view their services and processes from the perspective of their customers. They focus on effective leadership and clear communication; the “tone at the top” sets the direction and culture for the entire organization. Great organizations have performance measurement and management systems in place, designed with a balanced set of measures that are well understood by all levels of the company.

Fannie Mae has selected a targeted set of financial, performance and capability measures that are important in assessing the overall efficiency and effectiveness of our servicers. The STAR Performance Scorecard consists of a balanced set of those measures, focused on servicing performance and outcomes.

There is a strong correlation between operational effectiveness, customer satisfaction and financial outcomes. The Servicer Capability Model (SCM) supports our servicing partners by providing a framework that aligns our servicers’ capabilities with Fannie Mae’s objectives. This framework establishes a single and consistent reference point with which to evaluate and measure individual servicer operations across people, processes and technology.


2.2 Preface > Program Rationale and Benefits

The STAR Program provides consistent, specific, and measurable expectations aligned with Fannie Mae’s business objectives. Focusing on critical success factors and associated measurements helps prioritize servicer efforts and identify the key linkages between operational areas and business results.

© 2016 Fannie Mae. Trademarks of Fannie Mae 2.22.2017 6 | P a g e

2.2 Preface > Program Ra tionale and Benefits

2.2 Program Rationale and Benefits

Align servicer performance with Fannie Mae goals

Formally communicating credit, performance and operational goals by establishing transparent measures will ensure Fannie Mae’s objectives and the performance of the servicers are tightly linked.

Enhance the operational effectiveness of servicers

Through the use of its assessment framework, the STAR Program will help identify leading

practices and operational gaps. A marked focus on key operational capabilities can help servicers realize competitive market gains.

Improve borrower experience

By measuring the effectiveness of servicers’ interactions with borrowers, including the counseling that servicers offer, and implementing improvement roadmaps, servicers will enhance the overall borrower experience.

Promote servicing knowledge and excellence across housing industry and drive change

By establishing and publishing an open SCM, the STAR Program will serve as a basis for sharing leading practices and key measures for the industry. In addition, servicers will have access to peer benchmark data to support their own measurement programs.

Focus on actions that reduce credit losses

Managing credit loss is in the interest of all constituents. The STAR Program is a comprehensive performance management tool designed to increase focus and to substantially improve outcomes for Fannie Mae, the servicer and the borrower.


2.3 Preface > I ntended Audience

2.3 Intended Audience

Mortgage Servicing Organizations

Operations Managers - The primary audience of the STAR Reference Guide is management within Fannie Mae’s servicing partners. The Reference Guide is designed to assist them in understanding Fannie Mae’s expectations, improving their operations to consistently meet and exceed those expectations, and sharing the resulting successes.

Managers across the various functional areas with responsibility for the designated business processes will be able to use the framework outlined in the Reference Guide to measure and improve their operations.

Servicing Executives - Executives will benefit from understanding the Performance Scorecard approach that emphasizes Key Performance Indicators (KPIs). It enables executives to quickly gauge the effectiveness of key functions and processes.

Analysts - The Servicer Capability Model (SCM) described in the Reference Guide may be leveraged by servicing analysts charged with optimizing the servicer’s platform, conducting operational assessments or quality control, and servicer evaluations. The relationship between KPIs and operational drivers will help analysts monitor trends and target opportunities for improvement.

External Organizations

The STAR Program augments existing evaluations of servicer performance by other rating and benchmarking entities. The STAR Program provides a balanced approach for assessments and decision making concerning their servicing partner relationships.


2.4 Preface > Document Organization and Structure

2.4 Document Organization and Structure

Chapter 3: Servicer Total Achievement and Rewards (STAR) Program

Provides an overview of how servicers are recognized for their achievement. Servicer inclusion, STAR Program structure, and Program Administration are explained.

Chapter 4: STAR Performance Scorecard

Outlines the components of the STAR Performance Scorecard, including credit performance and operational capability scores. The Performance Scorecard provides monthly, quarterly, and year-to-date performance results.

Chapter 5: Servicer Capability Model (SCM) Framework and Methodology

Explains the operational assessment architecture, methodology and ratings. A business architectural approach is used to align objectives with processes, critical success factors, and key indicators.

Chapter 6: SCM – Organizational Overview and Shared Processes

Describes the organizational overview and shared processes used in the assessment of the Business Processes.

Chapter 7: SCM – Business Processes

Describes servicing business processes, including General Servicing, Solution Delivery, and Timeline Management. For each process, establishes required data collection, evidence and evaluation guidelines. Additional Business Processes may be scoped into future releases.


3. Servicer Total Achievement and Rewards (STAR) Program

3.1 Program Overview

The Servicer Profile classifies servicers based on portfolio composition and size.

Measures are standardized to ensure transparency and simplicity. Servicers are provided a confidential scorecard on a monthly basis.

A structured operational assessment may be completed through evaluation of the Servicer Capability Model (SCM).


3.2 Servicer Total Achievement and Rewards (STAR) Program > Servicer Inclusion Criteria

3.2 Servicer Inclusion Criteria

Servicers participating in the STAR Program are classified into the following three categories: General Servicing, Solution Delivery and Timeline Management.

General Servicing: Includes servicers that have greater than 50,000 Fannie Mae loans or have greater than 20,000 Fannie Mae loans and 1% of the delinquent loan population is 60+ days delinquent.

Solution Delivery: Includes servicers that have at least 750 delinquent loans between two months delinquent and the allowable Foreclosure time frame.

Timeline Management: Includes servicers that have at least 1,000 delinquent loans that are beyond the allowable Foreclosure time frame.

Inclusion criteria is established to offer a balanced perspective of volume and credit risk exposure and servicers participation in the program may be discretionary as determined by Fannie Mae.

General Servicing

Arvest Central Mortgage Company Navy Federal Credit Union Associated Banc Corp New York Community Bancorp, Inc. BOK Financial Corporation PennyMac Caliber Home Loans Provident Funding Associates, L.P. Colonial Savings, F.A. Saul Centers, Inc. (Capital One) Everbank Financial Corporation Sovereign Bank, a FSB Flagstar Bancorp SunTrust Banks, Inc Guild Mortgage Company, LLC Third Federal Savings and Loan Association M&T Bank Corporation Trustmark Corporation MB Financial Inc

General Servicing Solution Delivery Cenlar Capital Corporation Loancare, Inc Citigroup, Inc. PNC Financial Services Group, Inc. Citizens Bank, National Association Quicken Loans, Inc. Dovenmuehle Mortgage, Inc Regions Financial Corp. Fifth Third Bancorp Roundpoint Financial Group, Inc. Freedom Mortgage Corporation U.S. Bancorp Huntington Bancshared Incorporated


General Servicing Solution Delivery Timeline Management Bank of America Corporation Ocwen Financial Corporation Ditech Financial LLC PHH Corporation JP Morgan Chase & Co Seterus Nationstar Wells Fargo & Company

*Servicers will be measured based on all loans they service. For sub-serviced loans, this will be identified based on the transaction code 80 reporting requirements.

Groups were established based on October 2016 portfolio data.


3.3 Servicer Total Achievement and Rewards (STAR) Program> STAR Recognition and Criteria

3.3 STAR Recognition and Criteria

Servicers are eligible for STAR Performer recognition for each program category, General Servicing, Solution Delivery and Timeline Management, in which they met the inclusion criteria.

A servicer may be recognized as a STAR Performer by demonstrating consistent performance across scorecard metrics for the associated Process. In addition, the results of the STAR Operational Assessment and Servicer Quality and Risk (SQR) review will be taken into consideration when determining if the servicer will receive a STAR Performer designation.


The STAR Program Team i s the admi ni strator of the overal l Program. Fanni e Mae’ s Rel ationship Performance Managers and Servi c i ng Management wi l l partner wi th servi cers to ensure adherence to al l Program requi rements.

3.4 Servicer Total Achievement and Rewards (STAR) Program> Program Administration

3.4 Program Administration

Fannie Mae’s STAR Program Team is responsible for planning, directing, and coordinating various activities related to the Program, including:

Establishing business rules that govern the Program Governance and Change Management

Program communication and coordination

The STAR Program Team has several resources supporting the Program:

The Relationship Performance Managers and Servicing Management teams at Fannie Mae are responsible for individual servicer accounts and serve as the initial point of contact for servicing staff.

The central repository for STAR materials is www.FannieMae.com. The Reference Guide, Performance Scorecard White Papers, FAQs and training modules are available on the website.

General Program inquiries may be directed to [email protected]. Fannie Mae welcomes recommendations and input from servicers to improve the Program. Email recommendations to [email protected].


http://www.fanniemae.com/singlefamily/star



4.1 STAR Performance Scorecard > Scorecard Overview

4. STAR Performance Scorecard

4.1 Scorecard Overview

Fannie Mae provides performance results to servicers on each metric via the STAR Performance Scorecard associated to the three Program categories:

General Servicing

Servicers are measured on the basis of their performance managing early term roll rates, customer service call center management, and investor reporting and accounting.

Solution Delivery Servicers are measured on the basis of their ability to resolve delinquent loans and their effectiveness at managing their collections call center.

Timeline Management Servicers are measured on the basis of their ability to resolve or liquidate loans that are beyond the allowable Foreclosure time frames, report new REO inventory in a timely manner, and ensure that the property is marketable.

All STAR servicers may be evaluated based on their performance relating to Servicer Capability Model performance metrics. Performance metrics are tied to Process Areas, if applicable, and are measured based on set thresholds and/or peer comparisons. The Servicer Capability Model metric Dashboard provides servicers with visibility into monthly and year-to-date performance.

The Scorecard metrics were selected based on Fannie Mae’s current strategic objectives to minimize credit losses, increase operational efficiency and improve the borrower experience. As conditions change, the STAR Program will update and communicate revisions to these key performance indicators.


4.1 STAR Performance Scorecard > Scorecard Overview

Background

The STAR Scorecard measures servicer performance in the Credit Performance and SCM metrics relevant to the activities they perform on behalf of Fannie Mae. All STAR servicers are included in the General Servicing category based on the volume of loans they service for Fannie Mae. Servicers that service a significant number of delinquent loans may also be included in the Solution Delivery and/or Timeline Management categories. Servicer’s monthly scorecards represent their performance in the relevant metrics.

STAR Scorecard Metrics

The following table represents the metrics across the three core servicing areas measured in the Scorecard:

Process Area Credit Performance Servicer Capability Model

• Transition to 60+ • Multi-Occurrence Hard Reject Rate General Servicing

• Multi-Occurrence Soft Reject Rate

• Shortage Percentage • 60+ to Cure • Average Speed to Answer – Collections • Retention Efficiency • Abandonment Rate – Collections Solution Delivery

• Liquidation Efficiency

• 6-Month Mod Performance

• Transition to Beyond Time • Motions for Relief Referred Timely Timeline Management

Frame • REOgrams Submitted within Timeline

• Title Issues Resolved within 45 Days

The STAR Performance Scorecard White Paper provides additional information on the following topics:

• Metric Definitions • Comparable Pool Construct • Threshold Definitions • Scoring Framework


5.1 Servicer Capability Model Framework and Methodology > SCM Framework Introduction

5. Servicer Capability Model (SCM) Framework and Methodology

5.1 SCM Framework Introduction

The SCM is the detailed framework by which Fannie Mae will evaluate individual servicer capabilities across standard dimensions of people, processes and technology. The SCM provides clear and actionable direction to servicers based on data that allows for root cause analyses.

Source: Six Sigma D-M-A-I-C methodology

Define: The SCM describes a Business Architecture, or a logical blueprint, for defining and controlling business objectives.

Measure: Critical Success Factors from the SCM identify key focus areas where the servicer must perform effectively, using generally accepted metrics.

Analyze: Using data collected, trending, comparative, and regression analyses can help to provide insight into operations and performance drivers.

Improve: Servicer and Servicing Management defined action plans to address performance gaps and opportunities.

Control: Framework will be applied across all servicers and provide a quick means to understand the inputs and outcomes across servicing activities.


5.2 Servicer Capability Model Framework and Methodology > Business Architecture

5.2 Business Architecture

The STAR Program uses the business architecture to reflect servicing operations. This business architecture:

Defines how business objectives, processes, and key performance indicators relate. Supports a top-down approach and a common and consistent framework for viewing

and analyzing servicer capabilities across the key dimensions of people, processes and technology.

All Process Areas and associated Critical Success Factors and metrics described in the STAR Reference Guide follow the numbering scheme outlined in the figure below.

SCM Business Architecture

Proc

esse

s


5.3 Servicer Capabili ty Model Framework and Methodology > SCM Framework Introduction

5.3 SCM Framework Introduction

Performance is based on design and execution of underlying organizational processes. Well-designed business processes typically increase effectiveness and efficiency in meeting core objectives.

ORGANIZATIONAL OVERVIEW AND SHARED PROCESSES

Shared Processes are defined as processes that serve the entire enterprise and support efficient and effective functioning of key business processes.

Typically, enterprise Shared Processes include Human Resource Management, Information Technology, Compliance and Business Process Management. Support Shared Processes typically include Project and Portfolio Management, Quality Assurance, Quality Control and Business Performance Analytics.

The Shared Processes currently in scope for the STAR Program are Project Management, Business Process Management, Internal Controls, and People Management. Shared Processes do not receive a stoplight rating (i.e., red, yellow or green) instead the information will be used to provide context to the Business Process Area evaluations.



BUSINESS PROCESSES

Business Processes are the primary functions servicers perform to achieve their business objectives. Examples include customer support, cash management, and loss mitigation. The STAR Program scope will consider General Servicing, Solution Delivery, and Timeline Management

Process Area Critical Success Factor Assessment Area

General Servicing

7.1.1 Investor Reporting and Accounting

7.1.1.1 Investor Reporting and Custodial Reconciliation

Fannie Mae Cash Reporting and reconciliation

7.1.2 Loan Administration

7.1.2.1 Escrow Administration

Escrow analysis

Escrow management Escrow disbursements

7.1.2.2 Loan On and Off Boarding

Communicat ion On boarding Of f boarding

7.1.3 Customer Service

7.1.3.1 Call Center Operations

Call center management

Call center reporting 7.1.3.2

Workf orce Management

Staf f ing Optimization

Call Monitoring

7.1.3.3 Customer Satisf action

Customer satisfaction surveys

Written Communicat ion 7.1.3.4

Escalations

Escalations management

7.1.4 Collections

7.1.4.1 Collections Operations

Borrow er Outreach

Collections Reporting

7.1.4.2 Workf orce Management

Staf f ing Optimization

Call Monitoring

7.1.4.3 Borrow er Assessment and Counseling

Counseling and decisioning tools

Execution of collections strategies




Solution Delivery

7.2.1 Loss Mitigation Operations

7.2.1.1 Single Point of Contact and

Workf orce Management

Ow nership model

Workf orce management

7.2.1.2 Borrow er Solicitation

Solicitation of retention and liquidation solutions

7.2.2 Retention

7.2.2.1 Retention Counseling and Decisioning Tools


7.2.2.2 Retention Solution Management

Pipeline management and exception monitoring

7.2.3 Liquidation

7.2.3.1 Liquidation Counseling and Decisioning Tools


7.2.3.2 Liquidation Solution Management

Pipeline management and exception monitoring

Timeline Management

7.3.1 Bankruptcy

7.3.1.1 Case Initiation

Bankruptcy case opening and servicer system update Proof of Claim filing and case review

7.3.1.2 Timeline Management and Reporting

Managing key bankruptcy milestones and timelines

Adherence to Fannie Mae bankruptcy referral guidelines

7.3.1.3

Process Management

Adherence to payment plans or other arrangements

Managing post-discharged Chapter 7 loans

7.3.2 Foreclosure

7.3.2.1

Foreclosure Initiation

Pre-referral to foreclosure review on loans determined eligible for foreclosure

Timeliness, completeness and accuracy of referral package


Adherence to Fannie Mae foreclosure timelines and reporting requirements Monitoring attorney performance

7.3.2.3 Process Management

Pre-foreclosure sale management and oversight

Attorney Management

7.3.3 Property Preserv ation and Post Foreclosure Management

7.3.3.1 Preserving, Protecting and Maintaining Fannie

Mae Collateral

Properly maintain property condition through inspection, preservation and maintenance

7.3.3.2

Post Foreclosure Review

Fannie Mae guidelines f or REOgrams are alw ays met

Servicer elimination/rescission notif ications

7.3.3.3 Title Exceptions

Conveyance of clear and marketable title to Fannie Mae


5.4 Servicer Capabili ty Model Framework and Methodology > Operational Assessment Overview

5.4 Operational Assessment Overview

The STAR Program is designed to:

1) Help servicers better manage their Fannie Mae business by

Offering a consistent framework for benchmarking performance and capabilities Providing a comprehensive evaluation of servicers’ operational capabilities

Identifying recommendations and targeted areas for improvement

2) Ensure servicers understand how to satisfy Fannie Mae’s goals and objectives by

Establishing a consistent methodology for comparing capabilities between servicers Tracking performance relative to Fannie Mae targets Improving transparency

Providing a common vehicle for communication

3) Establish clear expectations by

Using Fannie Mae’s Relationship Performance Managers and Servicing Management team to serve as a central engagement resource

Offering clear terms of engagement Using existing documentation and review results, when appropriate


5.5 Servicer Capability Model Framework and Methodology > Operational Assessment Process

5.5 Operational Assessment Process

Servicers will complete an organizational profile and self-assessment in which they will evaluation their own capabilities, identify any known issues, and provide status on any current or planned actions.

SCM Performance Metrics will be mapped to Process Areas and categorized as Primary or Supplemental based on their impact to overall Process Area performance.

Required documentation, supporting artifacts, servicer interviews, system demonstrations and loan samples ensure a comprehensive evaluation, based on standardized evidence.

The STAR Program Team will form an independent evaluation of each Critical Success Factor and Process Area using SCM Performance Metrics and evidence, noted above. The evaluation will be completed based on the Servicer Capability Model.

The Operational Assessment evaluates the servicer’s capabilities to deliver expected results. Key measures and formal evaluations are used to assess the servicer’s capabilities and competencies. Major steps in the assessment process are shown below.


.5 Servicer Capability Model Framework and Methodology > Operational Assessment Proc ess

Process Level Profile

The STAR Program views the business architecture and the servicer’s capabilities in context of the environment in which the servicer operates. A thorough understanding of the servicer’s operating environment will provide context for the operational assessment. The Process Level profile will assist with more appropriate analysis of the Required Data and Evidence, and ultimately more accurate Evaluations.

The following elements of the Process Level Profile are required for each Process Area:

Organizational structure and scale of operations Organizational staffing overview, including capacity, recruitment, training, alignment and

retention

Technology and application environment

Evaluation

Servicer ratings are determined based on performance in the SCM metrics, if applicable, and a qualitative review of people, processes and technology. Assessment against the SCM, is described more fully in the next section.

SCM Performance Metrics

o Servicers should demonstrate consistent performance for primary SCM performance metrics based on set thresholds or compared to other Fannie Mae servicers

o Consistent performance is determined by assessing month-over-month performance for a set timeframe

Sufficiency of supporting evidence, which may include the following: o Direct evidence – This type of evidence includes direct outputs or deliverables of

processes or sub-processes under assessment. Examples include completed checklists, quality control reports, and a system of record notations.

o Indirect evidence – Indirect evidence includes the artifacts used to support the execution of processes and sub-processes. Examples include process descriptions, training materials, presentations and templates.

o Affirmation evidence – This type of supporting evidence is often helpful when the first two types of evidence are insufficient to rate the servicer’s process or sub- process. Examples include servicer interviews and system demonstrations.


Servicers are given an opportunity to respond to the evaluation and provide follow-up evidence. Fannie Mae, at its discretion, may consider the new evidence and update its assessment accordingly.

5.5 Se rvicer Capability Model Framework a nd Methodology > Operational Assessment Process

Servicer Capability Model

The SCM used in the STAR Program seeks to provide a common framework for identifying and prioritizing key improvements that will influence desired outcomes.

The SCM will be applied consistently across all servicers to ensure fairness.

Each level represents well-defined stages of specific capabilities in reference to

targeted Process Areas.

Each maturity level builds upon the previous level and serves as a foundation for eventually achieving a continuous improvement paradigm.

STAR Program Servicer Capability Model

Servicer Capability Maturity Model


6.1 Orga nizational Overview and Shared Processe s

6. SCM – Organizational Overview and Shared Processes

6.1 Organizational Overview and Shared Processes

Process Area As s essment Assessment Area

Organizational Overview and Shared Processes

6.1.1 Organizational Overview

Not applicable

Servicer organizational overview

6.1.2 Change Management

6.1.2.1 Project Management

Project Management methodology Project documentation


Process Management Methodology Key Process documentation

6.1.3 Risk Management

6.1.3.1 Operational Risk Management

Internal control measures Control exceptions

6.1.3.2 Compliance Monitoring and Oversight

Compliance and Regulatory Change Management

6.1.3.3 Internal Audit Audit Facilitation

6.1.3.4 Business Continuity and Management

Business Continuity and Disaster Recovery

Technology Systems and Controls

6.1.4 People Management

6.1.4.1 Incentives Framew orks Organization and structure of programs

6.1.4.2 Workf orce Development

Vacancies and f ill times Executive experience levels

Employee satisf action 6.1.4.3

Training Effectiveness Scope of training programs

6.1.5 Vendor Management

6.1.5.1 Vendor Selection

Process f or selecting vendors

6.1.5.2 Vendor Management and Oversight

Management and oversight of vendors

Vendor communication


6.1.1 Organizational Overview and Shared Processes > Organizational Overview

6.1.1 Organizational Overview

Organizational Overview *

List of k e y servicing functions including: • Geographic location(s) • Department head • Total # of Fannie Mae loans serviced • Total # of non-Fannie Mae loans serviced

List of k e y vendors used including:

• Geographic location(s) • Service provided • # of Full Time Employees (FTE) f or each

vendor f unction performed

Open Positions

• # of currently open full time positions • # of currently open part time positions • # of currently open executive positions

Workforce Management • Fill times for staff • Turnover rates by department • Total # of FTE employees • Total # of contract employees • Training hours by department • Employee tenure by department • Employee mortgage and functional

experience

*Organizational data elements may be collected through the Servicer self-assessment an d data collection form.


6.1.2 Organizational Overview and Shared Processes > Change Management

6.1.2 Change Management

Introduction

Organizations with well-defined change management frameworks and methodologies successfully implement large initiatives in the most effective manner. Integrating change management and project management practices support project alignment and increases the effectiveness of execution and likelihood of sustainable change.

Servicers are under increasing pressure by regulators, borrowers, shareholders and investors to continuously improve their business. These pressures lead to servicers initiating a wide range of company projects including small targeted campaigns, process enhancements, large complex system implementations and major business process re-engineering initiatives. A servicer’s ability to standardize its project management practices mitigates the risk of project failures and maximizes the value delivered to its own organizational processes as well as to Fannie Mae- serviced portfolios.

Change management incorporates the organizational tools to help companies accomplish strategic goals. Assessments can be an effective tool used by the change management team or project leader to assess the organization’s readiness to change and gain insights into the challenges and opportunities they may face during the change process. Change Management must be an integral part of initiating projects and Business Process Management activities.

Efficient Project Management ensures that investment decisions and resources are appropriately allocated to project initiatives that directly contribute to the success of accomplishing the organization’s strategic objectives. Beginning change management activities early in the project lifecycle allows the categorization, aligning, and exchanging of information to be more effective.

The most effective change management approach is one that is strategic and aligns with specific deliverables and milestones identified within the project management framework. Many organizations have customized execution frameworks that are tailored to their specific environments. The STAR Program does not endorse any specific methodology.



6.1.2.1 Project Management

Assessment: Project Management methodology

Adoption and application of project management standards, including change management and governance, are key indicators of a servicer’s ability to consistently and accurately implement new Fannie Mae programs. Although Fannie Mae does not endorse any specific project management standards, it expects servicers to have established project management practices and to actively promote and apply such practices throughout the organization.

Project Management: Standardized Practices: Project Management methodology

Evidence

Policies, Procedures and Documents describing project management standards, including:

Change control and governance

Communication and escalation requirements

Milestone review s and approvals

Evaluation and Recommendations

STAR Program evaluation of project management consists of the following:

Quality documentation of project management methodology. Documentation of established control measures to ensure the methodology is applied consistently

across all Fannie Mae-related projects. Review for adequacy of industry standard applications used for tracking progress, identifying risks,

and integration with other projects or processes. Templates and tools are widely available to promote adoption of the methodology across all

departments.

STAR Program evaluation of project change control and governance consists of the following:

Change management and governance protocols are established for all projects. Policies and Procedures for project management are comprehensive, well documented and

communicated effectively for planning, executing and managing project change. Appropriate levels of authority for key stakeholders are current and up to date for project oversight.



Project management staffing and training: Qualified personnel are assigned the responsibility of tracking the status of all

Fannie Mae projects. The status should be updated on at least a monthly basis.

Training toward certifications in widely practiced methodologies is encouraged.

STAR Program recommendations may consist of the following: Improvements to project management methodologies, policies, procedures, process flows, and governance documentation.

Best practices that could be implemented to improve overall project performance. Tools and applications that could enhance tracking, reporting, and oversight.

Assessment: Project documentation

Formal project management documentation provides a basis for establishing communication, project scope, risk analysis, resource allocation, and tracking mechanisms for adaptability to change.

Project catalogs/inventories increase visibility into current projects and allow management to quickly assess current use of resources across all business projects.

Project documents should describe project charter, type, business objectives, plan, resources, key stakeholders and sponsors, key risks, deliverables, and status updates. Documents should contain project dates, versioning control and appropriate approvals, and must be well communicated to all parties relevant to the project.

Project Management: Standardized Practices: Project documentation

Evidence

Project charter detailing project team structure, organizational impact analysis, and key project control risks

All project documentation is current w ith revision dates notated

Project catalog / inventory




Project catalogs/inventories should include: Process area the project is addressing (e.g., Customer Service, Investor Relationship Management, Foreclosure Referral, Loss Mitigation Solution Delivery).

Primary business area in which the project is chartered. Primary business needs driving the project (e.g., Technology, Compliance, Campaigns).

Specific Fannie Mae goal the project is addressing. Importance of the project relative to other initiatives (priority). Types of risk that could jeopardize the successful outcome of the project (e.g., Complexity, Resource, Cost).

Project start date and scheduled end date. Current status of project. Dedicated project manager and project sponsor.

Project documentation is comprehensive and describes at a minimum:

Scope – involves determining and documenting a list of specific project goals, deliverables, tasks, costs and deadlines.

Project plan – formal document designed to guide the control and execution of a project.

Role s and responsibilities – For project execution, the document clearly identifies project participants and stakeholders. It also outlines individual responsibilities regarding deliverables and timeframes.

Communication Plan – Clear communication strategies are adopted and stakeholders are informed on a regular basis through the use of formal group and individual meetings, emails, and other communication media.

Current documentation – Project documents are updated frequently. Accessibility of project documentation by associates – Project documents are available in an easily accessible location by project associates and their supervisors.

Change Control – Changes for specific projects are well documented and appropriate sign-offs are obtained.

Versioning control – Ensures project documents are actively managed. Qualified individual(s) – Those assigned to maintain a list of all Fannie Mae projects and statuses are well trained and qualified.




Introduction

Leading practices show that organizations with well-defined Process Management frameworks and methodologies are able to integrate effective designs and execute key business functions. Mature and efficient companies define and adapt key business processes to remain flexible to the changing needs of customers, clients, investors, regulatory agencies, and internal business users.

Maintenance of a Process Management Model or architecture supports a top-down approach for analyzing operational and technical decisions. End-to-end process flows serve as a standardized blueprint of company operations to help identify impacts on costs, controls, risks, and other metrics. This enables company management to strategically align resources, reduce redundancies, and make tactical investments that promote a continuous improvement framework.

Process management documentation is a prerequisite for effective governance, mitigating financial risk, and maintaining an adequate control environment. Regulators, auditors, internal audit, and compliance teams all require views into how business processes are documented and communicated.

Fannie Mae is interested in the quality of documented key business processes and the relationships between all key business functions. Servicers should demonstrate an understanding of business transaction flows, interdependencies of multiple system applications, and departmental control flows.

Servicers who use a process-driven approach with distinct deliverables for change management can easily integrate projects from both a practical and a tactical perspective.


6.1.2 Orga nizational Overview a nd Shared Processe s > Change Management

Assessment: Process Management methodology

Applied business process management standards, including change management and governance, are key indicators of a servicer’s ability to consistently and accurately deliver quality service to customers, clients, and investors. Change management and governance may include identifying a need for a change, requesting change, analyzing change impact, mitigating risks, implementing change, defining controls to be monitored and adhering to a protocol that documents appropriate approvals. Although Fannie Mae does not advocate any specific documentation standards, it expects servicers to develop and maintain a set of company-wide standards in managing process documents (e.g., policies and procedures), job aids (e.g., checklists and call scripts), tools (e.g., income calculation sheets), templates (e.g., letters to borrowers), and metrics (e.g., cycle time) which are applied consistently throughout the company.

Process Managem ent: Standardized Practices: Process Management methodology

Evidence

Policies, procedures, and documents describing process management standards, including:

Procedure f or managing and introducing process revisions

Business ow nership and governance responsibilities

Standard change requests

Examples of process change approval sheets w ith signatures, titles and dates



6.1.2 Organizational Overview and Shared Processes s > Change Management


STAR Program evaluation of business process management consists of the following: Key measures are defined and monitored to gauge the effectiveness of processes.

Established control measures ensure that the process methodology is applied consistently between individuals and work groups.

Templates and tools are widely available to promote adoption of process standards across all departments.

Process management update/creation pipeline contains a reasonable volume of activity given business demands and includes prioritization to balance workloads.

STAR Program evaluation of process change control and governance consists of the following:

Policies and Procedures for business process management are comprehensive, well documented, and communicated effectively for planning, executing, and managing process changes.

Impact analyses are carried out adequately before process changes are approved.

List of approvers for proposed process changes is maintained and current.

A process exists to validate new or revised policies and procedures prior to implementation.

A process exists to ensure policies, procedures, and processes are updated and maintained to reflect remediated control deficiencies.

STAR Program recommendations may consist of the following: Improvements to process management methodologies, policies, procedures,

process flows, and governance documentation.

Best practices that could be implemented to improve overall process performance.

Tools and applications that could enhance tracking, reporting, and oversight.



Assessment: Key Process documentation

Business Process Management: Standardized Practices: Key Process documentation

Evidence

All policies, procedures, and support documents – including templates, f low charts, metrics, and job aids related to the key processes – need to be documented, versioned, dated, and maintained in an easily accessible location such as a shared drive or online procedure repository.


Process documentation management policies and procedures are evaluated for structure, symbols and notation standards, approval requirements, and versioning control. Key processes are evaluated for:

Completeness – Complete descriptions with no missing areas Currency – Prompt updates to documents reflecting changes

Accuracy – Documents match practiced processes Clarity – Structured logically and written in simple language Accessibility – Easily accessible by associates

Documentation, maps, and flows contain the following elements: Objectives of the process Participants, stakeholders, customers, and business owners Inputs and sources (suppliers, forms, data, and information) Applications and databases Key controls may be mapped to process activities Outputs (the product or servicer’s definition of intended outcome)

Verification that documented processes are consistently followed, as demonstrated by work products between individuals and work groups.

Periodic quality control reviews are conducted to ensure that employee’s actual work processes are consistent with the process map flows and descriptions.

Centralized repository for all process documentation is maintained either physically or electronically. Appropriate personnel are assigned and trained to ensure effective Document Management. A centralized document management group oversees all document-related processes, systems, and policies.

Process owners are assigned and sufficient authority is granted to improve processes. Employees and supervisors are trained in an effective and timely manner on all business process methodologies. Refresher courses should also be offered regularly.



6.1.3 Risk Management

Introduction

In today’s regulatory environment, servicers are required to comply with standards established by numerous regulators, government agencies, investors, and rating agencies. Risk management is strongest when there are three separate and clearly identified lines of defense within an organization. As the first line of defense, each line of business is responsible to manage their own risks though quality control measures. Operational management is responsible for maintaining effective internal controls and for executing risk and control procedures on a day-today basis.

The second line of defense, compliance, typically is responsible for monitoring the adequacy and effectiveness of internal control, accuracy, and completeness of reporting, compliance with laws and regulations, and timely remediation of deficiencies. Executive management must establish a culture that demonstrates a commitment to compliance activities. These activities should be well communicated throughout the organization and well documented with standardized policies, procedures, and guidelines that define all business processes.

The third line of defense, internal audit, provides assurance on the effectiveness of governance, risk management, and internal controls, including the manner in which the first and second lines of defense achieve risk management and control objectives. The ability to organize, govern, and manage these programs and address results from audit and review exercises is vital to the company’s success. Overseeing the remediation of audit findings is also an essential component of the internal audit core functions.

The ongoing evaluation of the effectiveness of the risk process should be carried out consistently in the course of monitoring and reporting. It should provide feedback to continuously update and improve all preceding steps in the process. The STAR Program does not endorse any specific risk management, internal controls, or auditing methodology. However, it does expect servicers to develop, establish, and follow a set of established standards for effectively managing and responding to identified control deficiencies or risks.


6.1.3 Organizational Overview and Shared Processes > Risk Management

6.1.3.1 Operational Risk Management

Assessment: Internal Control measures

Servicers are expected to communicate and enforce an environment that supports internal control activities throughout the organization. There should be adequate managerial and supervisory controls in place to ensure compliance and to identify control deficiencies, inadequate processes, and address control breakdowns. Servicers should test their internal controls periodically to evaluate the effectiveness of their internal control environment. Additional tests of controls may be required depending on circumstances such as the introduction of a new regulation, amendment of an accounting standard or a significant change in a servicer’s operations.

Well documented standardized processes, controls, policies, procedures and guidelines ensure effective risk management.

Risk Management: Operational Management: Internal Control m e asures

Evidence

Standardized policies and procedures surrounding internal control environment

Standardized policies and procedures surrounding internal control testing and ef f ectiveness

Adequate communication method to key stakeholders of the control activities


Documents are easy to read and understand.

Assessment: Control exceptions

Control deficiencies are identified through preliminary walkthroughs, substantive testing, and various audit and oversight activities.

Risk Management: Operational Management: Control exceptions

Evidence

Policies, Procedures and Document describing the process for:

Documenting and identifying exceptions Documenting and monitoring action plans

Validating remediation



6.1.3.2 Compliance Monitoring and Oversight

Assessment: Compliance and Regulatory Change Management

The mortgage servicing industry is expected to address a growing range of regulatory changes and requirements timely and effectively. A risk management function, such as compliance, is imperative to mitigate the various risks and ensure protocols exist to manage, communicate and implement regulatory changes across the organization.

Risk Management: Compliance Monitoring and Oversight: Regulatory Change Management

Evidence


Identif ication and assessment of regulatory changes that may impact the organization

Communicating regulatory changes throughout the organization

Tracking regulatory changes to ensure they are implemented and follow ed

Evidence of an implemented industry-w ide regulatory change

6.1.3.3 Internal Audit

Assessment: Audit Facilitation

Internal Audit maintains appropriate measures to ensure that the governance and risk framework of the organization is effective and all departments are in compliance with that framework and with their internal policies and procedures. Internal Audit is considered the third line of defense in the generally accepted governance framework.

Risk Management: Internal Audit: Audit Facilitation

Evidence


Performing independent audits of internal controls Tracking audit deficiencies to ensure they are resolved and updated controls have been

tested Evidence of an audit schedule



6.1.3.4 Business Continuity Management

Assessment: Business Continuity and Disaster Recovery

Business continuity plans allow for core operations to continue to function with no or minimal impact in the event of a disruption to normal business activities.

Risk Management: Business Continuity Management: Business Continuity and Disaster Recovery

Evidence


Evidence of business continuity and disaster recovery requirements Description of the process for updating and testing the business continuity and disaster

recovery plans Documentation of the most recent tests of the plan including date and lessons learned

Assessment: Technology Systems and Controls

Information and technology governance evaluates the impact IT has on the processes and abilities of an organization to achieve its goals and objectives. IT governance audits are conducted to assess the effectiveness of system applications and general controls.

Risk Management: Business Continuity Management: Technology Systems and Controls

Evidence


User access roles and restrictions Ensuring sensitive and confidential data is not compromised Data accuracy Physical security Network security




Internal Control Environment Control deficiencies or gaps and identified and addressed with the appropriate

stakeholders in a timely manner

Controls or compensating controls have been implemented to address deficiencies Newly implemented controls/processes have been communicated to all

stakeholders.

Regularly scheduled meetings to discuss trends The regulatory change management process should include:

Standard protocols for the identification and assessment of regulatory changes Standard communication templates

Monitoring and testing the implementation of regulatory changes

A designated group responsible for the management of all regulatory changes and requirements:

Group responsible for managing regulatory changes has the proper skill set and qualification to interpret regulatory guidance

Specialized training should be organized to compensate for lacking elements. As much as possible, experience in risk management roles should be supplemented with business experience in other roles and units.

Risk awareness and an appropriate level of risk training should be provided to all employees, compatible with their functions and levels of responsibility.

Internal Audit programs support continuous improvement of business processes through: Detailed audit plans and timely communication of audit schedule

Communicating audit progress to stakeholders Audit reporting and corrective actions are provided and discussed with

stakeholders Business continuity plans should include plans for:

Timely recovery of critical data Resources to access key systems Communications to internal and external parties for any temporary changes to business

Informational technology audits address the following control objectives:

Business continuity System security and access controls Compliance Data integrity


6.1.4 Organizational Overview and Shared Processe s > People Management

6.1.4 People Management

Introduction

The management framework and processes for People Management are critical to ensure that a servicer is prepared to meet the evolving needs of the market and the complexities of its portfolio. Skilled employees with competitive and results driven incentive structures, training programs and professional development tools provide a competitive advantage that differentiates servicing organizations and promotes excellent customer value.

Management teams with appropriate subject matter expertise and diverse experience provide a solid business operating environment. A servicer’s ability to recruit, develop, and retain talent assists the company in achieving operational objectives and enhancing customer service.

6.1.4.1 Incentives Framework

Assessment: Organization and structure of program

Well-designed incentive programs consist of many factors including the compensation tied to performance, frequency of payout, and scope of availability to earn an incentive to improve performance on a key function.

Additional elements (e.g., payout frequency, participation, and drivers) of incentive programs are assessed in the appropriate business process areas within the STAR Program.

People Management: Incentives Framework: Organization and structure of program

Evidence

Organizational description of incentive program application


6.1.4 Orga nizational Overview and Shared Processe s > People


The scope, type, and structure of the servicer’s incentive program are aligned with business goals.

Performance measurements are based on specific, measurable, achievable, realistic, and time-bound goals.

Incentive programs are well designed to minimize the risk of paying for an activity instead of performance based results (e.g., participants “game the system”).

Eligibility criteria is directed to the staff who directly contribute to outcomes of interest to Fannie Mae is measured and incentives are tied to results.

The program is communicated effectively to all personnel. Incentive programs are consistently applied throughout the company. Communication documents are easy to understand by all levels of employees.

6.1.4.2 Workforce Development Overview

Assessment: Vacancies and fill times

The number of current open positions and time-to-fill open positions at all levels of the servicing organization are factors that influence effective organizational performance.

People Management: Workforce Development: Vacancies and fill times

Evidence

Recruitment reports

Organization charts show ing open positions

Assessment: Executive experience levels

Experience levels and the tenure of executive personnel employed at Fannie Mae servicers contribute to effective leadership in a high performing organization.

People Management: Workforce Development: Executive experience levels

Evidence

Executive level organization chart including tenure w ith the company



Assessment: Employee satisfaction

Employee satisfaction surveys are important inputs to design effective recruitment and retention programs, reduce turnover rates and gauge morale within the company, management team, and other related factors.

People Management: Workforce Development: Em ployee satisfaction

Evidence

Recent employee satisfaction survey results, including percent meeting the company’s satisfaction criteria

Trending analysis

Documented management actions resulting from surveys


Recruitment, retention, and employee satisfaction measures are consistently applied throughout the company.

6.1.4.3 Training Effectiveness

Assessment: Scope of training program

The depth, organization, and frequency of training activities are a component of Fannie Mae’s assessment.

People Management: Training Effectiveness: Scope of training program

Evidence Training course list

Certif ication reports

Sample training materials


Training effectiveness is evaluated through a review of the servicer’s workforce development framework.

Training resources are available and easily accessible.

The breadth of topics and depth of coverage are comprehensive, particularly those related to the Fannie Mae Servicing Guide.

A wide range of delivery mechanisms, including classroom, web-based, on-the- job, and mentoring, is used to make training effective.



6.1.5 Orga nizational Overview and Shared Processe s > Vendor Management

6.1.5 Vendor Management

Introduction

Servicers should perform an initial risk assessment to determine whether or not to enter into a vendor relationship.

Servicers should have processes in place to effectively select and manage vendors used across all servicing functions. Effective vendor management also includes ensuring that knowledge of the outsourced process(es) is maintained in-house. Standardized practices should be in place to create a consistent approach to selecting a vendor and monitoring vendor activities.

6.1.5.1 Vendor Selection

Vendor selection is an important part of an organization’s operations and generally begins with conducting a thorough analysis of business requirements, scope, level of need, timeline, budget, and benefit analysis. Vendors are generally selected based on predetermined factors which can include ability, reputation, financial health, cost, scope of service, and location.

Assessment: Process for Vendor Selection

Due diligence should be performed prior to selecting a vendor, to assess qualitative and quantitative aspects of potential vendors and to determine if a relationship will achieve the strategic and financial goals, and mitigate identified risks. Comprehensive due diligence involves a review of all relevant information about a potential vendor, focusing on the entity’s financial condition, costs of service, specific relevant experience, knowledge of applicable laws, regulations, and Fannie Mae requirements, its Business Continuity Plan, reputation, and the scope and effectiveness of its operations and controls.

Once a vendor is selected, a contract should be negotiated and established which defines basic service agreements (service level agreements, operating level agreements, and other contractual relationships) and each party’s roles and responsibilities. In addition, appropriate actions and remedies should be established within the contract to ensure timely action to address and resolve any vendor performance failures.

Vendor Management: Vendor Selection

Evidence

Sample vendor training materials

Vendor selection policies and procedures

Sample vendor Service Level Agreements (SLA)

Due diligence checklist f or vendor selection


6.1.5 Organizational Overview and Shared Processes > Vendor Management


Documented policies and procedures must be in place to ensure consistency for vendor selection across the organization. These procedures should include the following provisions.

Vendors to have adequate business continuity plans in place. All vendors to have the ability to meet servicer and Fannie Mae requirements

relative to the work being performed. Use of other parties or subcontractors by the vendor. Adequacy of management information systems. Well-established processes are in place for performing due diligence on potential

and current vendor qualifications, expertise, cost of service, capacity, reputation, complaints, information security, document custody practices, financial viability, staffing levels, performance , and work quality.

SLAs in place which clearly define performance measures, turnaround times, expectations, escalations and use of third party or subcontractors.

6.1.5.2 Vendor Management and Oversight

Vendor management is a discipline that enables organizations to control costs, drive service excellence, and mitigate risks to gain increased value from their vendors throughout the life of the relationship.

Assessment: Management and Oversight of Vendors

As part of ongoing monitoring, servicers should continuously evaluate the vendor's compliance with service level expectations and conduct an annual performance evaluation. To do this effectively, servicers should retain knowledge of the outsourced processes in-house. In addition, servicers should consider whether the financial condition of the vendor has changed and confirm that the vendor’s disaster recovery plan remains adequate and updated to accommodate operational changes that may have occurred.

Servicers should ensure their disaster recovery plan includes protocols in the event of an operational failure for vendors used.

Servicers must show that they are managing vendor relationships and holding vendors accountable to the ever-changing regulatory and compliance guidelines.

The proactive management of ongoing vendor relationships ensures that any contractual deficiencies are identified and escalated to the appropriate level to ensure prompt resolution of issues.




Vendor Management: Vendor Management and Oversight

Evidence

Sample checklist f or oversight and compliance of vendors

Vendor review schedule including frequency

Sample vendor scorecard

Vendor oversight policies and procedures

Assessment: Vendor Communication

A consistent schedule for communication between servicers and vendors is a dependable way to ensure objectives are met, regulatory changes are addressed, and key stakeholders are aware of updates and strategy shifts. Regularly scheduled meetings allow the vendors, as well as the servicer, to share information and discuss performance in terms of service level expectations.

Communication should be established with internal business partners to convey contractual activities, gather information about ongoing contractual requirements, and assist in identifying any vendor performance issues. There should be frequent written communication, in the form of email, reports, and letters, as well as verbal communications, in the form of scheduled meetings and conference calls. In addition, it is a best practice to require the vendor to submit formal, written reports on key dates throughout the contract term.

Vendor Management: Vendor Management and Oversight

Evidence

Sample meeting minutes templates

Sample documents or communication used to correspond w ith the vendors and internal groups

Policies and procedures detailing the vendor escalation process w hen in breach of SLA

Documentation describing vendor communication process including the frequency of updates


6.1.5 Organizational Overview and Shared Processes s > Vendor Management


Effective processes are in place for managing the risks of vendor relationships including:

Reviewing the policies, procedures and training documents for the vendor. Customer complaint tracking for vendor services.

Language is included in contracts with each vendor to address performance expectations and consequences.

Taking action if vendors underperform, possibly including terminating the relationship. Ensuring knowledge of the outsourced processes is retained in-house.

A servicer must have a strong internal vendor management program to ensure vendors are managed to operational and performance risks. Vendor management and oversight includes:

Vendor management office and executive oversight. Quality control functions that conduct assessments over the completeness and

accuracy of processes performed. Clearly documented policies and procedures which outline the roles and

responsibilities for business units and the vendor management office for managing vendors.

Continuous improvement resources and process implementation team. Outside surveillance and audit support. Internal quality assurance audits and compliance resources. New technology and tools. Robust scorecard capabilities. Change management team and process. Business continuity plans which include vendor failure contingency plans.

Effective service relationship management also includes the following activities:

Clarifying expectations and documenting them in service agreements. Preparing for a new service. Monitoring results.

To determine if the vendor is performing as expected, it is a good practice to meet with the business that uses the vendor, frequently review the vendor scorecards, and validate that the data is accurate.

At a minimum, annual performance reviews are conducted to assess service level agreements.

Monthly review of vendor timeliness, competence, completeness and performance relative to servicer levels is established.


7.1 Ge ne ral Servicing

7. SCM –Business Processes

7.1 General Servicing



7.1.1.1

Investor Reporting and Custodial Reconciliation

Fannie Mae Cash Reporting and reconciliation

7.1.2

Loan Administration

7.1.2.1

Escrow Administration

Escrow analysis

Escrow management

Escrow disbursements

7.1.2.2 Loan On and Off Boarding

Communicat ion

On boarding

Of f boarding

7.1.3

Customer Service

7.1.3.1

Call Center Operations

Call center management

Call center reporting


Staff ing Optimization

Call monitoring

7.1.3.3

Customer Satisfaction

Customer satisfaction surveys

Written Communication

7.1.3.4

Escalations

Escalations management

7.1.4 Collections

7.1.4.1 Collections Operations

Borrow er Outreach

Collections Reporting


Staff ing Optimization

Call Monitoring

7.1.4.3 Borrow er Assessment and Counseling


Execution of collection strategies


7.1 Ge neral Servicing

Introduction

One of the primary functions of mortgage servicers is to successfully manage relationships with their two main customer groups: investors and borrowers. A servicer’s value is demonstrated through meeting contractual obligations, achieving investor expectations and understanding and fulfilling customer expectations. General Servicing includes processes related to managing these relationships, except those specific to Timeline Management.

In partnering with investors, General Servicing processes must adhere to investor-specific guidelines focused on reporting and accounting and have clear communication channels to respond quickly and effectively to investor requests and initiatives. These processes must be well defined and regularly audited to ensure accuracy and timely delivery of information.

To support borrowers, servicers perform activities centered on customer service, payment, and escrow administration. Servicers must have clear communication channels to respond quickly and efficiently to borrower inquiries, requests, and needs. Borrowers expect accessibility on a 24/7 basis with a diverse set of delivery channels. Payment administration involves accurate and timely posting of payments, tax and insurance disbursements, and borrower payment adjustments consistent with regulatory and contractual compliance. While General Servicing departments do not directly handle default management, they must facilitate interactions with these groups to support default management processes.

The primary objectives of a servicer’s collections operation are first to reach delinquent borrowers and then to use established methods to resolve delinquencies whenever possible. Successful outreach and resolution activities employ a multifaceted contact strategy, the tactical use of technology and analytics, internal staff expertise, as well as use of approved counseling agencies. Servicers must have a defined regimen of measuring and fine-tuning all of these key collection activities to achieve desired results.

Servicers are expected to use automation and prioritization tools, data analytics, and behavioral scoring models. Delinquent borrower contact rates may be maximized by the use of additional outreach methods including email, text messaging, and alternative methods, such as face-to-face contact.

Once contact is made, the collection staff needs to accurately assess the borrower’s intent and financial situation. An effective collections staff performs basic triage and counseling to direct the borrower into either a home retention solution or foreclosure alternative.




The STAR Program requires Organizational and Shared Process information related to the various functions under scope. The focus of Organizational information is on scale, complexity, and broader environmental factors while that of Shared Processes is on people, process and technology dimensions.

Applications used to support the processes, the extent of automation / integration between the various modules and the maturity of control procedures are reviewed.

People management practices are also reviewed. This requires servicers to provide key metrics identified in the following table and supporting documentation.

Specific focus areas for required data include performance metrics and staffing information used across all critical success factors within the Collections and Loss Mitigation section of the guide.



7.1. General Servicing: Process Level Profile

Organizational Overview

• # of geographic locations • Outsourced functions • Key vendor relationships • Description of organization structure including span of control

Applications and Environm ent

• Major applications and their versions by department • Degree of module integration and # of manual w orkarounds • Application documentation • Controls procedure documentation • Dialer • Customer contact management • Payment tools (e.g., Western Union, Quick Connect, etc.) • Degree of module integration and # of manual workarounds • Borrow er f acing w ebsite • Behavioral scoring model • Predictive analytics • Call scripts • Skip tracing • Other

People

General Background

• # of FTEs and part time employees by f unction

• Average # of years

of mortgage experience by f unction o Staf f

• Average # of years of respective f unctional experience by f unction o Staf f

Incentives

• # of employees participating in incentive program by f unction

Recruitment & retention

• # of open positions

by f unction o FTE o Part time

• Fill times by department

• Turnover rates by

department o Staf f o Supervisors o Managers

Capacity management

• Work load o Call Center

• # of calls • # of supervisors • # of managers •

Training

• # of total hours of training by f unction

• # of hours of Fannie

Mae related training by f unction

• Evidence of compliance training

• # of hours of

collections training


7.1 General Servicing: Process Level Profile (continued)

Investor Reporting and Accounting Metrics*

• Ending hard reject rate • Aged recurring hard reject rate

• Aged recurring soft reject rate • Percent of Loans not Reported • Average Days Reporting

• Surplus percent • LAR 83 Discrepancy Rate

Customer Service Metrics**

• % of call sampled (monitored) f or quality

• # of call monitored per agent per month

• % of agents monitored each month • IVR handle rate • Total calls offered • Total calls answ ered

• Total FTE agents • Average hours w orking call queues • Average speed to answ er • Abandonment rate • Average handle time • Blockage rate

• Automated Clearing House (ACH) enrollment

• First call resolution rate • Volume of w ritten correspondence • Average response time to w ritten

correspondence • Volume of escalations • Average resolution time for escalations

Collections Metrics

• % of call sampled (monitored) f or quality**

• # of call monitored per agent per month**

• % of agents monitored each month** • Total calls offered** • Total calls answ ered**

• Total FTE agents** • Average hours w orking call queues** • Average speed to answ er** • Abandonment rate** • Average handle time** • Blockage rate** • Skip tracing ratio**

• Transition to 60+* • Outbound Efficiency* • Penetration Ratio* • Repayment Plan Success Rate* • Current to Worse* • 30 to Worse*

* Metric details are available in the STAR Performance Scorecard white paper ** Performance data may be collected through the Servicer self-assessment and data collection form


7.1.1 General Servicing > Inves tor Reporting and Accounting


Investor Reporting and Accounting provides investors/guarantors with the information required to manage their investment and ensure timely cash flows. The key to maintaining a strong relationship and reassuring investors that their assets are being protected and properly accounted for is through the reporting of timely and accurate data on the performance of their portfolio. The relationship with the investor may take various forms depending on the type and volume of loans being serviced and the investor’s reporting requirements.

CSF: 7.1.1.1 Investor Reporting and Custodial Reconciliation: Maintain timely and accurate reporting, remitting and portfolio reconciliation processes, and reconciled custodial bank accounts.

Given the significant financial implications for the borrower, the servicer, and the investor, accurate transaction information and exceptions reconciliation must be made in a timely manner. Appropriate processes must be maintained and supported by an integrated system and conducted by well-trained personnel to ensure that the timeliness and accuracy objectives are met.

Assessment: Fannie Mae Cash Reporting and Reconciliation

Investor Reporting and Accounting: Investor Reporting and Custodial Reconciliation: Cash Reporting and Reconciliation

Evidence

Exception monitoring reports

Fannie Mae Master Servicing Servicer Scorecard

Exception Resolution policies/goals

Servicer Quality and Risk (SQR) Cash Management Review results and report

Quality Control process documentation


7.1.2 Ge neral Servicing > Loan Administration


Investor reports are generated daily and meet the needs of the investor reporting and remitting requirements function, particularly accounting methods, cutoff, and remittance frequencies, as well as the ability for automatic reconciliation functionality. Defined processes are used to review bank remittance reports adequately and timely.

Metrics in the report include a comprehensive set of data – information on payoffs, principal and interest collections, curtailments, loan modification transactions, and foreclosure/liquidations.

Investor reporting and custodial account reconciliations and exceptions are handled accurately and effectively by competent, well-trained, and experienced staff. To develop staff competencies, leading practitioners cross train employees in multiple areas, including cash processing, investor reporting and custodial account reconciliation.

Review of bank statement/report of cash activities versus remittance reports are performed to identify and resolve any differences.

All exceptions are resolved before the next reconciliation cycle.

Reporting system’s ability to meet the needs of the custodial account reconciliation function, particularly the automatic reconciliation functionality, is adequate. Also, the extent with which the system is integrated with other servicing functions is assessed.

Quality Control (QC) or secondary reviews of custodial account reconciliations are conducted on a regular basis.

Duties among cash processing, investor reporting, and custodial account reconciliation are segregated.

Personnel and systems are optimized to ensure timeliness and accuracy.

Continuous Improvement practices are in place with the ability to track, analyze, and quantify metrics to reduce the aging and number of monthly reporting/remitting exceptions. In particular, when exceptions are discovered, there are formal processes to address and find root causes.


7.1.2 Ge neral Servicing > Loan Administration

7.1.2 Loan Administration

Servicers should have processes to handle general servicing functions regarding escrow administration and the on and off boarding of loans.

Each year, the servicer should analyze each escrow account to determine that the balance is adequate and, if necessary, make any adjustments to meet the estimated future charges. In addition, servicers should provide all appropriate parties timely notification of their escrow analysis, where applicable. Servicers should have a process to ensure timely and accurate disbursements of real estate taxes, special assessments, hazard and flood insurance premiums, mortgage insurance, and other escrow related advances. Servicers should have reporting to track all escrow account disbursements and any aged payments that are past due.

Servicers should have appropriate controls and adequate procedures for the on boarding of new loans and off boarding of existing loans to avoid any delayed application of borrower payments of principal, interest, taxes or insurance.

CSF: 7.1.2.1 Escrow Administration: Escrow accounts are administered by trained and qualified staff in accordance with all applicable laws, government regulations, and investor requirements.

Assessment: Escrow Analysis

Servicers should have procedures to ensure all servicer escrow responsibilities are defined, monitored, and executed in an accurate and timely manner. Servicers should perform an annual analysis of escrow accounts to determine overages, shortages, or deficiencies, and notify the borrower of any changes. Additionally, servicers should develop and maintain escrow analysis service levels to ensure they have the capacity and scalability to perform analyses as workloads adjust.

Loan Administration: Escrow Administration: Escrow Analysis

Evidence

Sample of procedures f or escrow analysis activities, in adherence to all applicable law s, government regulations, and investor requirements

Vendor scorecards used to assess performance f or third parties that provide escrow analysis

activities

Sample quality control processes f or escrow analysis activities


7.1.2 General Servicing > Loan Administration

Assessment: Escrow Management

Servicers should have processes to identify when escrow accounts should be established. In addition, servicers should have procedures on how escrow accounts are set up and managed in accordance with all laws, regulations, and investor requirements. Servicers should also have controls to ensure escrow accounts are established timely and accurately.

When determining borrower eligibility for foreclosure prevention alternatives, servicers must retain all documents and information related to escrow set-up, escrow analysis, and escrow advances.

Loan Administration: Escrow Administration: Escrow Management

Evidence

Sample procedures f or establishing escrow accounts along w ith required implementat ion timef rames

Evidence of document retention f or escrow activities

Assessment: Escrow Disbursements

Servicers should have procedures to ensure that taxes, insurance, and assessment payments made on behalf of the borrower are timely and accurate. Servicers must also ensure that any escrow surplus due to the borrower is paid in a timely manner.

Servicers must also certify that they are complying with any laws, regulations, or contracts related to a borrower’s escrow deposit account and other collateral accounts (including those that are required to pay interest on a borrower’s escrow deposit account).

Loan Administration: Escrow Administration: Escrow Disbursements

Evidence

Description of procedures used to manage escrow disbursements

Vendor scorecards used to assess performance f or third parties providing escrow disbursement services

Sample reporting to track all escrow account disbursements and any aged payments that are

past due

Sample exception reports show ing impending escrow payments

Documentation of adherence to any law s, regulations, or contracts related to a payment of interest on a borrow er’s escrow deposit account




Escrow Accounts are administered by: Trained, qualified staff. If mortgage insurance, hazard insurance, flood insurance functions, and tax services are performed by third parties, third party activities are monitored and managed(if applicable).

Escrow Accounts are administered in compliance with the mortgage documents, all applicable laws and government regulations, such as Real Estate Settlement Procedures Act (RESPA), and investor requirements.

At a minimum, an annual analysis is performed on all Escrow Accounts and servicers send the borrower a notification detailing any pending changes at least 30 days prior to the payment change date.

Escrow Accounts are established in adherence to all applicable laws, regulations and investor requirements, and are managed accordingly.

Documentation and information on escrow activities is retained as stated in the Fannie Mae Servicing Guide. Escrow Account administration includes processes to ensure:

Borrowers are notified of overages, shortages, and deficiencies identified during the escrow analysis and the servicer has processes to appropriately recoup escrow account shortages and/or deficiencies and refund escrow account overages.

Escrow Account disbursements:

For taxes, insurance and assessments, payments are made in a timely and accurate manner.

Refunds are returned to the borrower in a timely fashion following mortgage payoffs or escrow account overages identified via escrow analysis, as appropriate.

Servicers should have procedures to detect when escrow items are not paid when due:

Reports are in place to monitor past due payments. The mortgage accounting system provides tickler reports to prompt payment of items as they become due.



CSF: 7.1.2.2 On and Off Boarding: Loan on and off boarding involves coordinating data and the transfer of information when loans are boarding or de-boarding the servicer’s loan servicing system. The success of a transfer is based on the new servicer’s ability to address all servicing aspects of the loans in a timely manner and in accordance with the Fannie Mae Servicing Guide and applicable laws. The transfer process should have minimal borrower impact and a defined hand off process for loans in different statuses including but not limited to loss mitigation, foreclosure, bankruptcy or litigation. The transfer strategy is based on the servicer’s ability to accurately reconcile and balance loan data files and ensure continuity of servicing. In addition, servicers must obtain Fannie Mae’s approval of all transfers, in writing, prior to the transfer.

Assessment: Communication

Servicers must ensure they have adequate processes and controls to notify borrowers of changes affecting the servicing of their loan. Both parties are responsible for notifying borrowers whose mortgages are being transferred as required by the Real Estate Settlement Procedures Act. Transferee servicers that are boarding new loans are expected to have sufficient and dedicated staff to handle borrower inquiries and communication throughout the transition period.

In addition, policies and procedures should be in place to notify third parties, such as insurance carriers, tax services, document custodians and foreclosure and bankruptcy attorneys, of servicing transfers.

Loan Administration: Loan On and Off Boarding: Communication

Evidence

Welcome letter

Goodbye letter

Third party notices

Policies and procedures f or notifying borrow ers and third parties of servicing transfers



Assessment: On boarding

Established on boarding processes should be in place to ensure pre- and post-transfer activities occur in a timely manner, are accurate, and do not disrupt service to the borrower. The transferee servicer should have procedures to quickly identify if loan transfer files contain all necessary information to complete the on boarding process. A smooth transition requires the transferee servicer to work with the transferor servicer to answer any questions or resolve any disputes regarding the transition. Staff and facilities should be prepared to handle all of the normal servicing and accounting transactions, as well as all of the borrowers’ inquiries regarding the transition.

When the servicing transferee receives the Principal and Interest (P&I) and Taxes and Insurance (T&I) custodial funds, experienced staff should be designated to handle the reconciliation process. If the transferor servicer has advanced delinquent interest or scheduled principal and interest to Fannie Mae, funds should be reimbursed to the transferor servicer as soon as a final account of all funds is received. All net amounts owed must be paid to the appropriate party on the effective date of the transfer.

Loan Administration: Loan On and Off Boarding: On boarding

Evidence

On boarding checklist

Transfer instructions or documented process

Policies and procedures f or reconciling all P&I and T&I custodial account, suspense and loss draft balances

Documentation for reconciling mortgage assignments

Documentation f or requesting transfer of custody of Mortgage Backed Securities (MBS) loan documents to the transferee’s custodian (if applicable)

Policies and procedures f or reconciling loan documents and mortgage f iles and records from

the transferor, including any mortgages that are in foreclosure, bankruptcy or loss mitigation, and f or any properties acquired by foreclosure or Mortgage Release™

Documented process f or handling mortgages in litigation, the process of foreclosure or

bankruptcy, and information f or the attorneys (or trustee) handling the cases



Assessment: Off boarding

To effectively transfer loan data files and information, the transferor servicer must provide detailed servicing records, including borrower information, loan status, Fannie Mae investor reporting and cash management information (including reports, transaction histories, litigation information, and all other loan account specific information that is deemed necessary to accurately service a borrower’s mortgage loan). In addition, all documents applicable to a loan should be transferred, including copies of the servicing files and custody documents.

Cash management is an integral part of the loan servicing transfer process. Both the servicing transferor and transferee should ensure they appropriately manage balancing the inflow and outflow of cash transactions prior to and after the transfer period. Efficient cash management processes include handling the transfer of borrower balances, borrower payments and/or payoffs, custodial balances, recoverable advances, and reconciliation issues.

Loan Administration: Loan On and Off Boarding: Off boarding

Evidence

Off boarding checklist

Transfer instructions or documented process

Policies and procedures f or f orwarding all P&I and T&I custodial account balances

Documentation f or preparing mortgage assignments

Policies and procedures for transferring custody of MBS loan documents and mortgage f iles and records to the new servicer

Policies and procedures f or notify ing the new servicer of any mortgages that are in foreclosure, f f




Communication: Dedicated team or single point of contact (SPOC) is in place to handle loan

servicing transfers.

Servicer provides the borrower with a follow up phone call or email after the welcome letter is sent.

Internal communication exists among the business units affected by loan servicing transfers.

On and off boarding:

Servicer has an established process to identify and handle missing loan file information. When there are missing documents, an escalation process should be in place to immediately request the missing documents from the transferring servicer.

Servicer transfer requirements and instructions should include defined deadlines or completion dates and include specific information on data transfer reports and file formats.

It is a leading practice for servicers to use electronic data transfers and files. Servicers efficiently verify and validate the data boarded onto the loan servicing

systems compared to the loan documents.

A detailed execution plan is used for on and off boarding loans and transferring data. Impact analysis should be conducted to determine necessary resources required

to manage transfers before and after transfers occur. Comprehensive on and off boarding checklists should include all necessary

documentation for each area within servicing including collections, loss mitigation, bankruptcy, foreclosure, IR&A, escrow, and litigation. Example: correspondence, letters or documents, requests, invoices, loan histories and comments, complete remittance history, a listing of all deals in progress, partial packages and trial modifications, last escrow analysis, ARM plans and details.

Servicers are expected to handle post transfer items (i.e. missing data, documents, files) timely.

Regular meetings should occur during the transfer period and include a final reconciliation of required deliverables including deadlines.

Servicers use Fannie Mae provided job aids regarding servicing transfers including required forms and approvals.


7.1.3 General Servicing > Customer Service

7.1.3 Customer Service The customer service area serves as the integral link between the servicer and the borrower by answering customer inquiries and retaining goodwill through relationship management. Customer service contact centers have evolved from handling borrower inquiries to being proactive in the identification of “at risk” borrowers, cross selling products and providing initial educationand counseling to distressed borrowers. Technological advances allow borrowers to access their account information on a 24/7 basis.

CSF: 7.1.3.1 Call Center Operations: Assess and respond to changes in call volume and capacity using a set of key measures to help manage the call center.

Assessment: Call Center Management

Servicers need to effectively monitor and assess call volumes in real time to determine call patterns and proactively manage changes in demand. In addition, servicers need to monitor and assess the impact of call volumes on staffing levels. Voice Response Units (VRU) or Automated Call Distribution Systems (ACD), allow customers to obtain information without speaking to customer service representatives to improve response time.

Customer Service: Call Center Operations: Call Center Management

Evidence

Sample call volume reports used by management

Analysis of call volume changes and record of steps taken by management to balance capacity in response to such changes

Analysis carried out by management on the ef festiveness of VRU/IVR

Description of technology and applications, including versions in production, f or real-time call volume management

Evidence of prioritization and/or call routing logic

Evidence of analysis to identify borrow er language segments and needs

Open and close time f or customer service call queues by day of the w eek

Internal perf ormance goals or standards on f irst call resolution rates

Evidence of analysis and use of call resolution information to manage and improve the call center




Fannie Mae evaluates servicer’s integrated call center system.

Determination is made of adequacy and frequency of capacity and demand reports. Call center metrics remain within Fannie Mae Servicing Guide thresholds. VRU and ACD systems are used effectively to meet call demands. If the

servicer operates multiple call centers, call volumes are dynamically load balanced across all locations.

We ll-trained resources are available and equipped to support overflow. Customer Service staff is trained in Fair Debt Collection Practices Act (FDCPA) requirements.

Non-English speaking borrowers are offered alternative communication vehicles. Servicer is available to receive inbound customer service calls, at minimum, during

standard banking hours (8 a.m. to 5 p.m.) Monday through Friday for all times zones in which they service loans. It is a best practice to be open after standard banking hours and at least one weekend day.

Assessment: Call Center reporting

Servicers need systems that track a balanced set of call center metrics. Call center scorecards are effective measurement tools that servicers should develop to compute overall call center performance measures. Scorecards can be used to identify effectiveness of technology or strategy changes and areas of possible improvement.

Customer Service: Call Center Operations: Call Center reporting

Evidence

Sample management reports

Call Center Scorecard

Coverage of call center activities by report metrics

Evidence of analysis of call center metrics f or trends, patterns, issue identif ication, etc.

Internal perf ormance goals or standards on f irst call resolution rates

E id f l i d f ll l ti i f ti t d i th ll t



Call center performance standards are established and maintained.

Automatic generation of daily call center reports. Frequency call center scorecard and management reports are refreshed. Call center reports include a balanced set of data on call center performance,

such as metrics on call volume, staff/load balancing, call type and repeat caller analysis, staff training and evaluation, and customer satisfaction.

Call center scorecard should include: Interactive Voice Response (IVR)) usage, total calls offered, average speed to answer (ASA), abandonment rate percentage (AR %), average handle time (AHT) and blockage rate. In addition, the call center scorecard should include internal thresholds for key metrics with variances.

Exceptions are monitored and tracked in management reports for timely resolution and improvements to the process.

CSF: 7.1.3.2 Workforce Management: Manage staffing levels to support call center activities and align incentives to drive behaviors and outcomes. Employees should be incented to meet or exceed individual and departmental goals. Perform call monitoring to ensure adherence with internal quality standards and service level expectations.

Assessment: Staffing Optimization

Customer Service: Workforce Management: Staffing Optimization

Evidence Documents describing staffing model required inputs and report outputs

Process describing use of the model to drive staffing decisions and analysis

Documentation for validating / normalizing the model

Evidence of incentive programs for customer service agents




A Staffing Model is established and maintained, and used to drive staffing needs per interval and recruitment when staff volume does not meet projected or measured needs:

Considers open positions, absenteeism, holidays, training, productivity by position, demand fluctuations, and planned programs.

Frequently updated to keep current and accurate.

Incentive plans are in place and incentive plan drivers align to departmental performance goals.

Assessment: Call monitoring

Servicers should monitor calls with the objective of achieving and maintaining complete, accurate, and timely records of all calls. It is a leading practice to make an audio recording of all calls.

Customer Service: Call Center Operations: Call monitoring

Evidence

Reports detailing call center telephone monitoring and their frequency

Call monitoring scorecard

Internal quality standards or goals

Evidence of analysis of call monitoring to achieve and maintain the call center quality standards established by the servicer

Evidence of remediation and feedback to call agents and follow -up af ter analyzing call

monitoring results


Call Monitoring Volume and frequency of monitored calls are adequate.

Metric deficiencies are used by management and the results and direction is provided to customer service agents to improve performance.



CSF: 7.1.3.3 Customer Satisfaction: Establish an effective process for assessing and maintaining customer satisfaction.

Assessment: Customer satisfaction surveys

Servicers should periodically and continually administer surveys to assess customer satisfaction with call center quality and performance.

Customer Service: Customer Satisfaction: Customer satisfaction surveys

Evidence

Sample customer satisf action surveys and related in formation

Description of customer satisfaction program including delivery methods and frequency of surveys

Analysis of customer satisf action survey results and customer f eedback

Evidence of using customer satisf action survey results to identif y and remediate call center

Assessment: Written communication

Servicers should have procedures to consistently handle written correspondence (e.g., email, letters) from borrowers. Responses should be consistent and reviewed by management when required. Written communications from borrowers should be responded to promptly.

Customer Service: Customer Satisfaction: Writtencommunication

Evidence

Reports identifying w ritten correspondence receipt and completion dates

Summary report of w ritten correspondence by type of borrow er inquiry / request


Customer satisfaction surveys are conducted using a wide range of media, including mail, telephone and the Internet.

Improvements are driven by survey results, tying call agent incentives and objectives to achieving targeted levels of customer satisfaction.

Most recent customer satisfaction surveys and trending analysis show high levels of customer satisfaction and validate that the servicer is maintaining or improving performance.

Relationships between performance metrics and customer satisfaction are analyzed to improve performance.

Servicer has processes for handling and tracking written customer inquiries.


7.1.4 Ge neral Servicing > Collections

CSF: 7.1.3.4 Escalations: Responding promptly to written borrower questions and requests and monitoring and tracking of escalations and complaints.

Assessment: Escalations management

A complaint or dispute from the borrower, the borrower’s trusted advisor, housing counselor, federal agency or elected official that rises to the level of an escalated case should be handled through escalation procedures that determine the involvement of supervisors or lead representatives.

Customer Service: Escalations: Escalations management

Evidence

Evidence of a process in place to track and address escalations

Reports identifying issues requiring escalation and their resolution

Frequency of reporting on escalations and resolutions

S t f l ti i l di l t d i i d t t


Escalation policies, procedures and performance standards, such as resolution times, are well established and practiced consistently. Efficient handoffs to Loss Mitigation are particularly important.

Identified deficiencies are used by management and provided to customer service agents to improve performance.

Type of escalation is analyzed to determine trends; changes to processes are made to address common issues.

Escalation resolution is managed timely.

Reporting is in place to manage escalations. Staff managing escalated cases must be:

Independent from the staff who handled the initial evaluation decision on the borrower’s request for assistance

Trained, knowledgeable, and accessible




7.1.4 Collections

CSF: 7.1.4.1 Borrower Outreach: Establish contact with the delinquent borrower using various communication media and support tools. Manage operations to identify borrowers who have the highest risk of default and the greatest likelihood of benefiting from early intervention. The deployment of appropriate technologies, tracking effectiveness of specific strategies, and managing quality standards is critical to reducing delinquencies.

Assessment: Borrower Outreach

The telephone remains the most commonly used outreach vehicle; however, for a more effective outreach strategy, servicers should also use other communication media, such as letters, website, and emails. When these measures prove ineffective in contacting certain borrowers, servicers should leverage alternative methods, such as face-to-face contact and skip tracing, and track the effectiveness of these methods.

The basic call campaign measures indicate a servicer's ability to track metrics and effectiveness in handling call campaigns. An advanced servicer should be able to decompose portfolios into risk tiers, apply differing treatment strategies and measure penetration in each tier.

Prioritization tools, such as behavioral scoring models, and predictive analytics, when integrated effectively with outreach policies, improve results. Effective outreach policies may involve prioritizing calls to borrowers with unsuccessful prior attempts and escalating calls to borrowers who break a promise to pay agreement.

Collections: Borrower Outreach: Campaign Prioritization

Evidence

Description documents on the behavioral scoring model or predictive analytics tool used by the servicer

Servicer analysis on model effectiveness

Work prioritization policy documents including methodology used (e.g., product, age of

delinquency, geography, single point of contact, investor, risk)


7.1.4 General Servicing > Collections


Measurements are in place to target outreach campaigns to the greatest impact. Statistical and numerical models are used to strategically identify potential

delinquent (or higher risk) borrowers and prioritize outreach campaigns. Many servicers augment these models with “best time to call” analytics to maximize contact rates.

Outreach campaign strategy is documented and ensures all eligible loans are targeted.

Established outreach campaign calendar is in place and is reviewed frequently by management.

A combination of outreach methods and measures are used.

Late notices provide clear information on the borrower’s requirements to cure default and offer alternative methods to communicate with the servicer.

Notices are distributed in a timely manner to all eligible population. Late notices are reviewed annually for clarity and content.

Skip tracing is conducted when delinquent borrowers cannot be located following a predefined number of attempts or immediately upon determining invalid contact information.

Assessment: Collections Reporting

Standard call center reporting allows the servicer to consistently monitor call center activities. Agent and department level call center scorecards provide insight into call center and agent performance relative to benchmarks. Month-over-month historical reports that include key metrics (Average Speed to Answer, Abandonment Rate Percentage, and First Call Resolution) allow management to identify and track changes in trends and measure servicer levels.

Using management reports to monitor call center performance is necessary to ensure timely resolution of issues to meet borrower and investor satisfaction.

Collections: Collections Reporting: Call Center reporting

Evidence

Sample call center management reports and scorecard

Sample agent level report and scorecard

Vendor performance scorecard, if applicable




Call handling procedures include: Escalation processes to manage key inbound call center metrics when

thresholds are not met.

Performance of key metrics aligns with Servicing Alignment Initiative (SAI)

Call center reports are in place to measure call center performance at the department and agent level.

Scorecards consist of a balanced set of metrics that are updated frequently. Leading servicers assign a management group or compliance team to review key metrics or “gap” reports on a regular basis.

Scorecards include performance indicators and variance to set benchmarks.

Call center staff has visibility into performance indicators throughout the day. Call center trend reporting is produced monthly, at a minimum, to effectively manage performance.

CSF: 7.1.4.2 Workforce Management:

Integrated set of processes used to optimize productivity by managing staffing levels to support collections activities, matching employee skills to specific tasks, and aligning incentives to drive behaviors and outcomes. Servicers need to effectively monitor and assess call volumes in real time to determine call patterns and proactively manage changes in demand. In addition, servicers should monitor and assess the impact of call volumes on staffing levels.

Assessment: Staffing Optimization

Staffing capacity models should be used to effectively match staffing needs to call volumes. Using a balanced capacity approach provides insight into estimated staffing levels and gaps relative to headcount, and creates a basis for forecasting staffing needs as call volumes change.

Collections: Workforce Management: Staffing Models

Evidence

Staff ing model inputs

Process describing use of the model to drive staff ing decisions and analysis

Documentation f or validating / normalizing the model

Employee incentive plans




A Staffing Model is established and maintained, and used to drive recruitment and training programs.

Considers open positions, absenteeism, holidays, training, productivity by position, demand fluctuations, and planned programs.

Frequently updated to be current and accurate.

The scope, type and structure of the Collections incentive program are aligned with investor goals.

Collectors are financially incented on individual and departmental performance including quality of work.

Incentive program drivers align with both the servicer and Fannie Mae goals.

The scope of participation is significant enough to affect behavior.

Assessment: Call monitoring

Collections: Call Handling: Call monitoring

Evidence

Call monitoring scorecard

Internal quality standards or goals

Evidence of analysis of call monitoring to achieve and maintain the call center quality standards established by the servicer

Call Monitoring:

Volume and frequency of monitored calls are adequate.

Identified deficiencies are used by management and provided to collections agents to improve performance.

All calls are recorded and archived for at least one year. Call monitoring scorecard incorporates recommended items from Know Your

Options Customer Care (KYOCC) Call Quality Scorecard




CSF: 7.1.4.4 Borrower Assessment and Counseling: Assess the borrower’s willingness and ability to successfully cure the delinquency. Establish performance measures and track decisioning effectiveness. Once borrower contact is made, collection agents need to accurately assess the borrower’s financial situation and intent to retain the property. The use of rules-based decisioning tools and checklists ensures all necessary information is collected and the best option for resolution is provided to the borrower.

Assessment: Counseling and decisioning tools

The collection agent determines the borrower’s intent to stay in the home and his or her willingness and ability to successfully cure the delinquency. Inherent in this decision is the assessment and review of the borrower’s ability and commitment to make future payments when due. Collectors must be equipped with the right set of tools and training to quickly gather, update, and assess borrower data. The collector must also thoroughly educate the borrower on all available solutions and gain the borrower’s commitment for resolution. To increase the effectiveness of counseling, servicers can partner with third partner credit counseling agencies. In addition, servicers must maintain accurate records of borrower contact in their systems.

Collections: Borrow er Assessment and Counseling: Counseling and decisioning tools

Evidence

Sample counseling scripts

System demonstrations

Financial analysis tools used to assess a borrow er

Servicer interview



Assessment: Execution of collection strategies

Payment plans with borrowers should be tracked for collection effectiveness and continuous improvement. Counseling effectiveness can be gauged by roll rates, success rates of promises to pay and outcomes for repayment plans, and referrals to loss mitigation.

Collections: Delinquency Resolution: Execution of collection strategies

Evidence

Repayment plan tracking reports

Loss mitigation referral tracking reports

Roll rate tracking reports


Training and tools that align with Fannie Mae goals are in place for collectors. Collectors receive counseling and negotiation training and related tools to perform

their jobs effectively. Leading servicers train collectors on the entire loan delinquency cycle and develop abilities to recognize outcomes beyond repayment options, such as modification, Mortgage Release™, short sale, and foreclosure. In addition, well-trained employees collect required financial documents early in the process for validation. Web portals provide an efficient means to collect and store documents.

Collection personnel are empowered and trained to identify loss mitigation opportunities and can perform basic loss mitigation (e.g., HAMP pre-qualification, repayment plans) without transferring the borrower.




Servicer staff understands the relationship between collection and loss mitigation and collection agents possess competencies in both areas. This is accomplished by cross- training employees. Staff has a holistic understanding of the entire delinquency lifecycle and can therefore make higher quality loan assessments, providing the homeowner with effective workout requirements and plans, and explaining resolution options and decisions.

Collectors are trained to recognize certain words, such as “vacant,” “listed for sale,” and “don’t want to remain in house,” that indicate triggers for alternative actions.

Call scripts and / or decision trees are used to guide collecting agents in their conversations with the delinquent borrower.

Appropriate identification and hand-off processes are in place to trigger referrals to loss mitigation and other departments in a timely manner.

Leading servicers frequently use warm transfers from collections to loss mitigation for more effective follow through with the right party at the time of contact.

Effective use of credit counseling agencies

Servicer tracks and responds to counseling agency referrals in a timely manner. Contracted counseling agencies work as partners with the servicer to provide

expanded geographic coverage, particularly for face-to-face interactions.

Servicer’s track record of providing effective solutions as measured by the success or failure of repayment plans and loss mitigation referrals is examined.

Servicers should monitor roll rates to measure their ability to manage delinquency performance and prevent future defaults.


7.2 Solution De livery

7.2 Solution Delivery

Process Area

Critical Success Factor

As s e s s m e nt Area

7.2.1 Loss Mitigation

Operations

7.2.1.1 Single Point of Contact and Workf orce

Management

Ow nership model

Workf orce management

7.2.1.2 Borrow er Solicitation

Solicitation of retention and liquidation solutions

7.2.2 Retention

7.2.2.1 Retention Counseling and Decisioning Tools


7.2.2.2

Retention Solution Management

Pipeline monitoring and exception management

7.2.3 Liquidation

7.2.3.1

Liquidation Counseling and Decisioning tools


7.2.3.2 Liquidation Solution Management

Pipeline monitoring and exception management


7.2 Solution De li very

Introduction

When collection efforts are insufficient to cure delinquent loans, servicers must have a well- trained staff capable of effectively deploying Fannie Mae’s loss mitigation solutions. A good loss mitigation operation has a single point of contact responsible for interfacing with the borrower, adequate staffing, and technology tools that support rapid decision making and execution of all loss mitigation solutions. In addition, precise, regular measurement of staff and workout option performance is critical for quality servicing.

Effective loss mitigation specialists quickly and accurately assess a borrower’s financial hardship to determine the optimal solution. In addition to the counseling and documentation duties of collectors, loss mitigation specialists must also secure and analyze borrowers’ financial documents and borrowers’ intentions regarding the property. Loss mitigation specialists must have effective negotiating skills to engage and motivate borrowers to participate in the solution. Finally, loss mitigation operations must deliver the solutions quickly but in a controlled environment.


The STAR Program requires Organizational and Shared Process information related to the various functions under scope. The focus of Organizational information is on scale, complexity, and broader environmental factors while that of Shared Processes is on people, process, and technology dimensions.



Specific focus areas for required data include performance metrics and staffing information used across all critical success factors within the Loss Mitigation section of the guide.

7.2 Solution Delivery: Process Level Profile


• # of geographic locations • Outsourced functions • Key vendor relationships • Hours of operation • Description of organization structure including span of control

Applications

Loss Mitigation applications • Workflow management • Imaging, document management • Decisioning rules engine • Degree of module integration and number of manual w orkarounds, including spreadsheets



7.2 Solution Delivery: Process Level Profile (continued)

People**

Recruitment & retention

• # of open positions • Fill times • Experience

o Staf f o Supervisors o Managers

• Turnover rates o Staf f o Supervisors o Managers

Capacity management • Work load

o # of loans per line employee

o Supervisor to staf f ratio o # of managers

• Skills assessment practiced

Training • # of hours of training • # of hours of Fannie Mae related training • # of hours of loss mitigation training • Counseling / decisioning skills training • Compliance training • Training material availability • Counseling training on Fannie Mae guidelines • # of FDCPA certif ied collectors

Loss Mitigation Metrics*

• # of Single Point of Contact (SPOC) FTE

• # of Retention FTE • # of Liquidation FTE • Retention eff iciency ratio

• Modif ication conversion rate – all products

• Retention solution timing

• 6-Month modif ication performance

• 12-Month modif ication performance

• 60+ to Cure • 60 to Worse Roll Rate • 90+ to Worse Roll Rate

• Liquidation eff iciency ratio • Liquidation solution timing




7.2.1 Solution Delivery > Loss Mitigation Operations

7.2.1 Loss Mitigation Operations

CSF: 7.2.2.1 Single Point of Contact and Workforce Management: Using an ownership model, more specifically SPOC, provides the servicer the ability to counsel and negotiate the most appropriate solution for the borrower with one dedicated contact. The ownership model ensures the servicer’s ability to provide updates on the status of any request for foreclosure prevention alternatives and more effectively move the borrower through the default prevention process to resolution.

Servicers need to effectively monitor and assess loss mitigation performance to determine appropriate staffing needs to meet both servicer and investor production goals. Servicers should have monetary incentive plans in place to incent loss mitigation employees to meet or exceed individual and departmental goals

Assessment: Ownership model

Servicers should use a SPOC ownership model throughout the delinquency lifecycle.

Loss Mitigation: Single Point of Contact and Workforce Management: Ownership model

Evidence

Documents describing ow nership model including structure, scope of responsibility, key handoffs and ow nership model referral triggers

Process describing staff ing model used to drive staff ing decisions and analysis


Servicer uses an Ownership Model: Delinquent borrowers are assigned a SPOC with which all interaction with the servicer

is handled.

The assignment of a SPOC is based on a meaningful driver.

The SPOC should be able to efficiently discuss all appropriate retention and liquidation options available to the borrower.

Assessment: Workforce Management:

Servicers should monitor and assess the impact of loan portfolio changes to ensure adequate staffing. Staffing models should use historical trends and seasonality to forecast staffing needs and drive recruitment efforts.

The scope of participation and amount of payout for incentive plans should be significant enough to positively affect behaviors. The work of staff who directly contribute to outcomes of interest to Fannie Mae should be measured with incentives tied to results.


7.2.1 Solution De livery > Los s Mitigation Operations

Loss Mitigation: Single Point of Contact and Workforce Management: Workforce management

Evidence

Process describing model used to drive staff ing decisions and analysis Loss Mitigation incentive program description, including performance and quality drivers


A Staffing Model is established and maintained by the servicer, and used to drive recruitment and training programs:

The model considers open positions, absenteeism, holidays, training, productivity by position, demand fluctuations, and planned programs.

The model is automated based on historical volumes and variations. A centralized tool is used to collect all historical and actual information and

forecast demand. The model is frequently updated to keep current and accurate.

The scope, type and structure of the loss mitigation incentive program are aligned with investor goals.

Loss mitigation specialists are financially incented on individual and departmental performance including quality of work.

Incentive program drivers align with both servicer and Fannie Mae goals.

The scope of participation is significant enough to affect behavior.


7.2.1 Solution De livery > Los s Mitigation Operations

CSF: 7.2.1.2 Borrower Solicitation: Servicers should proactively solicit borrowers for loss mitigation solutions in all stages of delinquency.

Assessment: Solicitation of retention and liquidation solutions

Tracking and measuring borrower responses to loss mitigation solicitations improves the servicer’s ability to identify successful campaigns and correspondence as well as measure the pull through rates associated with the solicitations.

Loss Mitigation: Borrower Solicitation: Solicitation of retention and liquidation solutions

Evidence

List of letters used f or borrow er outreach and timing

Description of modif ication solicitation campaign logic and exclusions

Borrow er response package tracking reports


Servicer has a documented process for conducting borrower solicitation using a variety of outreach methods. Tracking reports are used to monitor solicitation efforts.

Solicitation tracking reports are in place to measure effectiveness of borrower outreach campaigns.

Quality control processes are in place to ensure all eligible loans receive borrower response packages.

Servicer has exception reports to track loans not in compliance with servicer or Fannie Mae solicitation requirements.

Servicer has tools in place to identify loans eligible for Fannie Mae foreclosure prevention options Servicer proactively identifies loans eligible for Streamlined Modification prior to day 90

and continues solicitation efforts throughout the borrower’s delinquency.


7.2.1 Solution Delivery > Retention

7.2.3 Retention

CSF: 7.2.2.1 Retention Counseling and Decisioning Tools: Assess borrower’s situation to ascertain and counsel borrowers to appropriate loss mitigation option. Once borrower contact is made, loss mitigation specialists need to accurately assess the financial situation and the borrower’s intent to retain the property. Servicers must deploy appropriate tools and provide necessary training to their loss mitigation specialists.


The loss mitigation specialist determines the borrower’s intent to retain the home and his or her willingness and ability to successfully cure the delinquency. Inherent in this decision is the assessment and review of the borrower’s ability and commitment to make future payments when due. The loss mitigation specialist also must thoroughly educate the borrower on all available solutions as well as consequences associated with inaction or failure to perform and gain the borrower’s agreement for curing the account.

Loss mitigation specialists must be equipped with the right set of tools (e.g., checklists and rules- based decisioning tools) to quickly gather and update borrower data, and assess the borrower's financial situation. Decisioning tools, along with the Fannie Mae workout hierarchy and delegation of authority (if applicable), should include all delinquency resolution options and ensure the Fannie Mae decisioning waterfall is followed. Servicers should also have processes to proactively identify modification candidates.

Servicers must track completeness and accuracy of documentation to support resolution decision.

Loss Mitigation: Counseling and Decisioning Tools: Retention counseling and decisioning tools

Evidence

Documents describing counseling training provided to loss mitigation employees, including a list of all counseling training offered

Sample call scripts used f or loss mitigation solution counseling


Servicer interview

Loss Mitigation Workout Report


CSF: 7.2.2.2 Retention Pipeline Management: Proactively monitor and manage the retention solution case pipeline.

Efficient management of the retention solution pipeline is critical to maintaining high levels of borrower satisfaction while meeting various Fannie Mae program requirements. To ensure these objectives are met consistently, the servicer needs to control input, monitor and track cases, and manage exceptions.

Assessment: Pipeline monitoring and exception management

The servicer’s loss mitigation efforts must be aligned to Fannie Mae guidelines and goals. Servicers must maintain acceptable levels of workout efficiency and effectiveness based on the portfolio size and, more specifically, based on the volume of delinquent loans serviced.

The loss mitigation benefit for loss mitigation solutions is closely related to timing of delivery of the solution and also post-conversion performance of the modification.

Once a servicer establishes contact and identifies the need for a loss mitigation solution, the servicer must have controls to actively monitor progression through the stages of document collection, underwriting, and fulfillment. If progress lags behind the established timeline for a particular loss mitigation path, the servicer must deploy appropriate exception handling routines.

Loss Mitigation: Counseling and Decisioning Tools: Pipeline monitoring and exception management:

Evidence

Loss mitigation solutions performance scorecard

Sample pipeline reports

Sample exception reports

Servicer Interview


7.2.2 Solution De livery > Retention


Servicer has a documented process in place to monitor the timely delivery of loss mitigation solutions.

Servicer should have a performance scorecard and tracking reports in place to measure performance relative to internal and investor benchmarks.

Scorecards consist of solution efficiency drivers that are frequently updated. Leading servicers assign a management group or compliance team to review key benchmarks or “gap” reports on a regular basis.

Scorecards include performance indicators and variance to set benchmarks. Loss mitigation staff has visibility into performance indicators throughout the day. Status reporting is produced daily, at a minimum, to effectively manage performance. Reports are used to track trial payments and status to ensure timely modification

conversions.

Have a clearly defined workflow with automated triggers and appropriate support tools for efficient case management.

Eligibility criteria for opening a case are clearly defined. Support tools, such as checklists, are widely available or embedded in workflow.

Approval roles and delegations are clearly defined, and systematically driven. Documents can be easily accessed and are indexed in a centralized repository,

permitting caseload sharing where appropriate and necessary.

Proactively manage the loss mitigation pipeline. Provide Loss Mitigation staff with adequate training and job aids, such as

eligibility or documentation checklists, to facilitate the advancement of loans through the loss mitigation steps.

Provide borrowers with clear instructions on their responsibilities and a single point of contact from inception to resolution of the case. Create a sense of urgency with each interaction.

Provide borrowers with multiple mechanisms to return required information and check status including web portal, email, pre-paid overnight delivery, and facsimile.

Employ a variety of mechanisms to follow up on stalled loss mitigation cases, such as “Last Chance Letters,” alternative call times, and face-to-face contact / document chasing.

Document clear guidance for loss mitigation specialists around exit criteria such as number of failed attempts to contact a borrower regarding missing documentation and ensure the protocols are well defined and followed.


7.2.2 Solution Delivery > Retention

Proactively and promptly move cases from retention to liquidation when retention options have been exhausted.

Set increasingly aggressive targets for pull through rates and time to complete key milestone steps in the loss mitigation process for work teams and loss mitigation specialists.

Ensure mechanisms are in place to track exceptions by work team or individual and by step of the loss mitigation process.

Servicer must review and remediate SDQ loans that are in a non-performing loss mitigation workout.


7.2.3 Solution Delivery > Liquidation

7.2.3 Liquidation

CSF: 7.2.3.1 Liquidation Counseling and Decisioning Tools: Assess borrower’s

situation to ascertain and counsel borrowers to appropriate loss mitigation option. Once borrower contact is made, loss mitigation specialists need to accurately assess the financial situation and the borrower’s intent to retain the property. Servicers must deploy appropriate tools and provide necessary training to their loss mitigation specialists. Some of these tools include checklists that ensure all necessary information is collected, and decision tools, such as a net present value (NPV) calculator.


Once the loss mitigation specialist determines a retention solution is not appropriate, the loss mitigation specialist determines the borrower’s willingness and ability to successfully complete a short sale or Mortgage Release™. The loss mitigation specialist should have the necessary tools and scripts to provide the borrower a seamless transition from retention to a liquidation solution discussion.

Loss mitigation specialists must be equipped with the right set of tools (e.g., checklists and rules- based decisioning tools) to quickly gather and update borrower and property data to assess the best solution for the borrower. Decisioning tools, along with the Fannie Mae workout hierarchy and delegation of authority (if applicable), should use property value and loan data to determine the appropriate listing price and acceptable net proceeds needed to successfully consider a short sale solution. If a short sale is not feasible, a Mortgage Release™ should be promptly assessed.

Servicers must track completeness and accuracy of documentation to support resolution decision.

Loss Mitigation: Counseling and Decisioning Tools: Liquidation counseling and decisioning tools

Evidence

List and description of counseling training

Sample counseling scripts

Short sale and Mortgage Release™ procedures


Servicer interview

Loss Mitigation Workout Report


7.2.3 Solution Deli very > Liquidation

Evaluation and Recommendations Loss mitigation specialists are equipped with processes and support tools to assess borrowers' circumstances.

Effectiveness of counseling is measured in part by workout case volume and workout closing percentages. To make counseling more effective, servicers that demonstrate best practices provide loss mitigation specialists with extensive counseling training. In addition, training needs to equip loss mitigation staff with the full understanding of the delinquency lifecycle.

Servicer actively engages borrowers in pre- and post-modification counseling.

Comprehensive decisioning tools, including list price guidance, are used to guide both the borrower and the loss mitigation specialist. Thequality of decisioning tools is gauged in part by usage and feedback from loss mitigation specialists.

Servicer has processes to offer and evaluate loss mitigation alternatives throughout the delinquency lifecycle.

Servicer leverages Fannie Mae-provided tools and resources (e.g., KYOCC, Servicing Management Default Underwriter (SMDU), Post Modification Counseling, etc.)

Documentation is accurate and used to improve the process. Loss mitigation case records substantiate documentation accuracy and

completeness.

Loan reviews and re-default rates are used to evaluate the appropriateness and timeliness of workout solutions offered.

CSF: 7.2.3.2 Liquidation Pipeline Management: Proactively monitor and manage the liquidation solution case pipeline.

Efficient management of the liquidation solution pipeline is critical to maintain high levels of borrower satisfaction while meeting various Fannie Mae program requirements. To ensure these objectives are met consistently, the servicer needs to control input, monitor and track cases, and manage exceptions.

Assessment: Pipeline monitoring and exception management

The servicer’s loss mitigation efforts must be aligned to Fannie Mae guidelines and goals. Servicers must maintain acceptable levels of workout efficiency and effectiveness based on the portfolio size and, more specifically, based on the volume of delinquent loans serviced.

Once a servicer establishes contact and identifies the need for a loss mitigation solution, the servicer must have controls to actively monitor progression through the stages of document collection, underwriting, and fulfillment. If progress lags behind the established timeline for a particular loss mitigation path, the servicer must deploy appropriate exception handling routines.



Loss Mitigation: Counseling and Decisioning Tools: Pipeline monitoring andexception

management:

Evidence

Loss mitigation solutions performance scorecard

Sample pipeline reports

Sample exception reports


Servicer has a documented process in place to monitor the timely delivery of loss mitigation solutions.

Servicer should have a performance scorecard and tracking reports in place to measure performance relative to internal and investor benchmarks.

Scorecards consist of solution efficiency drivers that are frequently updated. Leading servicers assign a management group or compliance team to review key benchmarks or “gap” reports on a regular basis.

Scorecards include performance indicators and variance to set benchmarks. Loss mitigation staff has visibility into performance indicators throughout the day. Status reporting is produced daily, at a minimum, to effectively manage performance.

Reports are used to track trial payments and status to ensure timely modification conversions.

Have a clearly defined workflow with automated triggers and appropriate support tools for efficient case management.

Eligibility criteria for opening a case are clearly defined. Support tools, such as checklists, are widely available or embedded in workflow.

Approval roles and delegations are clearly defined, and systematically driven.

Documents can be easily accessed and are indexed in a centralized repository, permitting caseload sharing where appropriate and necessary.



Proactively manage the loss mitigation pipeline.

Provide Loss Mitigation staff with adequate training and job aids, such as eligibility or documentation checklists, to facilitate the advancement of loans through the loss mitigation steps.

Provide borrowers with clear instructions on their responsibilities and a single point of contact from inception to resolution of the case. Create a sense of urgency with each interaction.

Provide borrowers with multiple mechanisms to return required information and check status including web portal, email, pre-paid overnight delivery, and facsimile.

Employ a variety of mechanisms to follow up on stalled loss mitigation cases, such as “Last Chance Letters,” alternative call times, and face-to-face contact / document chasing.

Document clear guidance for loss mitigation specialists around exit criteria such as number of failed attempts to contact a borrower regarding missing documentation and ensure the protocols are well defined and followed.

Proactively and promptly move cases from retention to liquidation when retention options have been exhausted.

Set increasingly aggressive targets for pull through rates and time to complete key milestone steps in the loss mitigation process for work teams and loss mitigation specialists.

Ensure mechanisms are in place to track exceptions by work team or individual and by step of the loss mitigation process.


7.3 Time line Management

7.3 Timeline Management


7.3.1 Bankruptcy

7.3.1.1 Case Initiation

Bankruptcy case opening and servicer system update

Proof of Claim filing and case review


Managing key bankruptcy milestones and timelines

Adherence to Fannie Mae bankruptcy referral guidelines

7.3.1.3

Process Management

Adherence to payment plans or other arrangements

Managing post-discharged Chapter 7 loans

7.3.2 Foreclosure

7.3.2.1

Foreclosure Initiation

Pre-ref erral to foreclosure review on loans determined eligible for foreclosure

Timeliness, completeness and accuracy of ref erral package


Adherence to Fannie Mae foreclosure timelines and reporting requirements Monitoring attorney perf ormance


Pre-foreclosure sale management and oversight

Attorney management

7.3.3 Property Preservation and Post Foreclosure Management

7.3.3.1

Preserving, Protecting and Maintaining Fannie Mae Collateral

Properly maintain property condition through inspection, preservation and maintenance

7.3.3.2

Post Foreclosure Review

Fannie Mae guidelines f or REOgrams are alw ays met

Servicer elimination/rescission notif ications 7.3.3.3

Title Exceptions Conveyance of clear and marketable title to Fannie Mae


7.3 Time li ne Management

Introduction

Timeline Management encompasses management and oversight of bankruptcy, foreclosure, and post-foreclosure activities.

Servicers are responsible for establishing thorough processes and procedures for monitoring and resolving bankruptcy cases, which include but are not limited to monitoring bankruptcy filings and initiating appropriate servicer processes, managing and monitoring the bankruptcy attorney's performance, timeline performance and cure rates, and providing foreclosure prevention activities, where applicable. The servicer is responsible for providing a complete referral package to the bankruptcy attorney, any additional documentation, information, or signatures the bankruptcy attorney requests, and for fulfilling all of its other servicing obligations.

Fannie Mae requires its servicers to perform all necessary steps to ensure that foreclosure proceedings are conducted appropriately. Foreclosure processes and procedures vary by jurisdiction. In many states, foreclosures have become complex and require attorneys who are adept at understanding and assimilating dynamic legal processes. Servicers must use attorneys that meet Fannie Mae’s minimum requirements to execute the foreclosure process. Servicers are expected to maintain frequent and high quality communication with foreclosure attorneys, and have the necessary processes and oversight functions to ensure required foreclosure timelines and legal expense guidelines are met.

Servicers are expected to follow certain procedures after foreclosure. Following a foreclosure, the servicer notifies Fannie Mae of the foreclosure by sending a REOgram, which initiates post-sale activities. Fannie Mae then takes steps to prepare the Real Estate Owned (REO) property for sale. Although the marketing and sale of the REO unit is conducted by Fannie Mae, the servicer is responsible for promptly notifying Fannie Mae of foreclosure completion, conveying clear and marketable title, maintaining the Homeowner’s Association (HOA) dues and property taxes, and preserving the property until conveyance to Fannie Mae. Collectively, these steps help limit timelines and contain costs associated with the acquisition and disposition of REO properties.



training


The STAR Program requires Organizational and Shared Process information related to the various functions under scope. The focus of Organizational information is on scale, complexity, and broader environmental factors while that of Shared Processes is on people, process and technology dimensions.



Specific focus areas for required data include performance metrics and staffing information used across all critical success factors within the Timeline Management section of the guide.

Timeline Management Level Profile


• # of geographic locations • Outsourced functions • Key vendor relationships • Description of organizational structure, including span of control

Applications and Environment

• Major applications and services used f or timeline management • Degree of module integration and # of manual w orkarounds • Controls documentation

People General background • # FTEs • Average # of years of

mortgage experience o Staf f o Supervisors o Managers

• Average # of years of timeline management experience o Staf f o Supervisors o Managers

•

Recruitment & Retention • # open positions o FTE o Part time o Fill times

• Turnover rates f or past 12 months o Staf f o Supervisors o Managers

Capacity Management

• Work load o # of f iles

o # of supervisors o # of managers

• Skills assessment practiced

Training

• # hours of training

• # hours of Fannie Mae related training

• # hours of bankruptcy training

• # hours of f oreclosure training

• Compliance

Bankruptcy Data



7.3 Timeline Management • % of Proof s of Claim ref erred

timely * • A verage days between clos ing

order and removal f rom bankruptcy s tatus **

• A verage days in bankruptcy chapter 7**

• A verage days in bankruptcy chapter 13**

• % of Motions f or Relief ref errals submitted timely to attorney *

• # of delinquent loans w ithout ref erral f or all bankruptcy chapters exceeding Fannie Mae ref erral guidelines **

• Bankruptcy no LPI movement to Bankruptcy Inventory *

• A verage age of ref erral**



Timeline Management Level Profile (continued)

Foreclosure Required Data* • % of sales held inventory* • Pull-through rate*

• 180+ Loans not in a Foreclosure Status*

• Scheduled sales to foreclosure inventory**

• Sales held to foreclosure inventory* •

• Foreclosure holds to inventory** • Beyond Time Frame Resolution* • Average Age of Loans Beyond

Allow able Foreclosure Time Frame**

Property Preservation and Post Foreclosure Management RequiredData* • # of total REOgrams f or the

period* • # of REOgrams completed within

timelines* • % of REOgrams submitted w ithin

timelines** •

• # of servicer elimination/recession notif ications**

• % of servicer elimination notif ication exceptions*

• # of title exceptions** • % of title exceptions* • # of HOA title issues resolved w ithin 45

days* • # of tax-related title issues • % of tax title issues resolved w ithin 45

days*

• % of Foreclosure deed title issues resolved w ithin 45 days*

• Average days to complete seller not in title issues* % of Seller not in title issues resolved w ithin 45 days*

• Maintenance Score*




7.3.1 Bankruptcy

CSF: 7.3.1.1 Case Initiation: Ensure processes are in place to update the servicer’s system and notify affected departments on new bankruptcy filings, as well as confirming all initial key milestones are met.

Servicers must have processes and written procedures to control and monitor bankruptcy proceedings effectively. These processes and procedures must cover bankruptcies filed under Chapters 7, 11, 12, and 13 of the Bankruptcy Code.

Assessment: Bankruptcy case opening and servicer system update

The servicer should have processes and procedures to monitor bankruptcy proceedings. When a borrower files, the case status must be entered into the tracking system and shared with other affected departments. This ensures timely notifications so debt collection efforts can be suspended and the servicer can maintain individual case files for each mortgage loan involved in a bankruptcy proceeding.

Bankruptcy: Case Initiation: Bankruptcy case opening and servicer system update

Evidence

Checklist or documentation of steps to review and confirm bankruptcy information and any prior bankruptcy f ilings

Sample new bankruptcy f iling and exceptions reports (i.e., case initiation delays, title issue

tracking and delay reports, cash management reports)

Documentation of quality control procedures f or the bankruptcy initiation process, including suspension of debt collection ef f orts


7.3.1 Timeli ne Management> Bankruptcy

Assessment: Proof of Claim filing and case review

To protect Fannie Mae’s assets, servicers must file Proofs of Claim in accordance with local requirements. As a matter of practice, servicers should file Proofs of Claim as soon as possible, but no later than deadlines established by the courts. For escrowed loans, servicers should also ensure that an accurate and timely escrow analysis is completed and provided to all appropriate parties. For Chapters 12 and 13, the escrow analysis should reflect properly in the borrower’s post-petition payments.

Servicers must obtain and review the case docket and any proposed reorganization plan prior to the confirmation hearing and any deadline to object to confirmation. The review should address:

Modifications to the security deed or mortgage or terms of the promissory note Determination of asset/no-asset case Correct arrearage amounts and payments of interest (provided that it is permissible in the

filing district) Arrearage claims filed in a reasonable period of time in accordance with local rules

and practices, as applicable First post-petition payment due dates, as applicable Filings that occurred in a conduit district, as applicable Inclusion of attorney fees, where applicable

Bankruptcy: Case Initiation: Proof of Claim Filing and case review

Evidence

Documentation of Proof of Claim preparation and f iling process

Management exception reports

Documentation of quality control procedures in place f or plan review and proof of claim preparation




Servicers must proactively monitor bankruptcy filings and obtain updated case information and documentation.

Procedures are implemented to proactively monitor bankruptcy filings to identify bankruptcies at the time they are filed by the borrowers. These procedures must include verification of the debtor’s interest in the property and assessment of bad faith filings.

Case status tracking is established in the servicer’s system.

To prepare all personnel to adequately address new bankruptcy filings, the servicer must implement procedures that ensure key milestones are met.

Timely notifications to all internal and external departments involved with a bankruptcy are completed and documented. All departments affected by the bankruptcy filing take the necessary actions to ensure adequate remedies are pursued, and the servicer’s and investors’ risks are appropriately managed. This includes the immediate cessation of debt collection efforts upon bankruptcy verification.

A bankruptcy case file is established and maintained in accordance with the Fannie Mae Servicing Guide.

Bankruptcy personnel are trained on the differences between Chapters 7, 11, 12, and 13, and how those differences impact the initial case review and bankruptcy milestones. Additionally, bankruptcy personnel review and address risks, including but not limited to cramdowns and bad faith filings.

Checklists or decision trees are used to assist bankruptcy personnel in reviewing bankruptcy cases and reorganization plans.

Claims and escrow analyses are processed accurately and in a timely manner.

Management uses reporting to monitor the bankruptcy portfolio and review and address exceptions.

Reports are used to determine the number of new bankruptcy filings and identify trends.

Exception management reports are reviewed to identify and address process inefficiencies.



CSF: 7.3.1.2 Timeline Management and Reporting: Maintain an accurate bankruptcy timeline and status tracking system.

The STAR Program rates servicers on their ability to efficiently and effectively manage the bankruptcy process. Servicers should implement a system that tracks bankruptcy status to ensure milestones are met within the appropriate timelines.

Servicers should have processes that support, facilitate, and monitor bankruptcy attorney inquiries and communication response times with the servicer’s bankruptcy function. Continuous bankruptcy attorney and servicer feedback minimizes response turn-around time and bankruptcy processing delays. Servicers must stay compliant with statutory, regulatory and Fannie Mae-driven changes.

Assessment: Managing key bankruptcy milestones and timelines

Given the increased importance of foreclosure prevention in connection with bankruptcy filings, the servicer's bankruptcy staff must be knowledgeable about Fannie Mae's overall foreclosure prevention practices.

In each bankruptcy case, servicers must consider forbearance, a repayment plan, modification, Mortgage Release™, or short sale. In addition, the servicer’s bankruptcy monitoring process must include procedures to identify foreclosure prevention opportunities, and the servicer and the bankruptcy attorney must work together to pursue these opportunities during all phases of the bankruptcy process.

Bankruptcy: Timeline Management and Reporting: Managing key bankruptcy milestones and timelines

Evidence

Reports used to monitor and manage bankruptcy milestones and timelines

Reports or scorecard to monitor bankruptcy vendor performance including service level agreements

Exception reports and procedure to identify and manage loans in defaulted status

Reports on bankruptcy accounts w ith active title issues (i.e. chain of title issues, lack of assignments of mortgage)

Documentation of quality control process

Policies and procedures on f oreclosure prevention ef f orts f or loans in bankruptcy



Assessment: Adherence to Fannie Mae bankruptcy referral guidelines

When a Motion for Relief referral is appropriate, the servicer must send a complete referral package to the attorney within the timelines established in the Fannie Mae Servicing Guide. The referral package must include all of the legal documents the attorney needs to conduct the bankruptcy proceedings, property inspection, and all necessary information about the status of the property, the borrower, the mortgage loan, and the bankruptcy filing. The servicer also must include all relevant information on the current and any prior bankruptcy filings involving the borrower or the subject property (such as plans, pleadings, schedules, and proofs of claim), foreclosure prevention activities, loan collection history, any previous (or current) foreclosure status information, and all information the servicer has regarding the value of the security property (if applicable).

Bankruptcy: Timeline Management and Reporting: Adherence to Fannie Mae bankruptcy referral

guidelines

Evidence

Copies of current policies and procedures depicting w hen loans should be ref erred to bankruptcy attorney

Exception reports used to monitor the referral

Documentation of quality control procedures f or the referral process


Servicer must efficiently and effectively manage the bankruptcy process. Bankruptcy loans do not exceed estimated/required bankruptcy timelines

within each major milestone.

Use state-specific referral checklists to ensure status reports are complete, timely, and accurate.

Referral packages contain all required documentation and are sent within the timeframes established in the Fannie Mae Servicing Guide.

To ensure the servicer complies with the guidelines, effective exception handling procedures should be in place. Servicers must:

Generate frequent, automatic and comprehensive management reports on all bankruptcy cases.

Implement procedures to address, in a timely manner, bankruptcy cases which do not meet Fannie Mae guidelines.



Servicer must review and remediate SDQ loans that are in Bankruptcy Chapter 7 or Chapter 13 with no LPI (Last Paid Installment) movement for a defined time period.

Monitor bankruptcy payments and take appropriate and timely action when payments are missed.

Monitor bankruptcy dockets to determine updated bankruptcy status and take necessary actions.

Ensure Fannie Mae bankruptcy delinquency status codes are reported accurately.

Servicers should continually train and coach staff on new foreclosure prevention initiatives.

Training guides and resources should be available for reference by employees. Periodic audits should be conducted for quality assurance.

Policies and procedures should be continually updated to reflect current foreclosure prevention initiatives.

Policies and procedures should be available to all employees for reference and guidance.

Routine audits should be conducted to ensure policies and procedures are up to date.

Adequate controls are in place to ensure borrower solicitation packages are centralized and monitored for loans in bankruptcy.

CSF: 7.3.1.3 Process Management: Provide accurate and timely cash management, as well as ensuring effective post-closing servicing occurs.

Throughout the life of the bankruptcy, servicers should implement a system and processes to continuously monitor pre- and post-petition status and payments for Chapters 11, 12, and 13 bankruptcies, as well as tracking the status and contractual payments for Chapter 7 bankruptcies, and ensure timely Motion for Relief processes are followed. Proper payment status reporting is vital to identify contractual or post-petition defaulted loans.

Servicers must also have procedures to verify bankruptcy laws are adhered to regarding the servicing of Chapter 7 post-discharge loans.



Assessment: Adherence to payment plans or other arrangements

The servicer must retain and maintain accurate records of the payments (contractual, pre-petition, and post-petition) it receives from the debtor or trustee, before, during, and after the bankruptcy process to ensure that payments are applied in a timely manner and are properly accounted for, in accordance with Fannie Mae's standard servicing requirements, the debtor's contractual obligations, and the rules of the bankruptcy court. The servicer must keep the bankruptcy attorney informed about the debtor's payment record.

Bankruptcy :Process Management: Adherence to payment plans or other arrangements

Evidence

Cash management reports show ing total funds, including pre- and post-petition, f or all bankruptcy chapters

Policies and procedures detailing bankruptcy cash management processes and requirements

Assessment: Managing post-discharged Chapter 7 loans

Case completion for a Chapter 7 bankruptcy proceeding is defined as the termination of the automatic stay, the case being dismissed or closed, or when the borrower receives a discharge and the trustee abandons all interest in the secured property. Although the servicer may not attempt to collect on the debt from the borrower personally once a discharge is received, the servicer should still pursue the applicable foreclosure prevention alternatives if the loan is delinquent. In situations where retention options are implemented with borrowers who received a Chapter 7 discharge but have not reaffirmed the mortgage debt, servicers must ensure they follow Fannie Mae guidelines to make clear they are not seeking to collect the debt as a personal liability of the borrowers.


7.3.1 Timeline Management> Bankruptcy

Ev aluation and Recommendations

Servicers must monitor post-petition status throughout the life of the plan to determine if and when an account defaults. Upon default, the servicer must take appropriate action to seek relief from the bankruptcy stay.

Routine monthly audits of post-petition status for all active bankruptcies.

Routine audits of unapplied partial balances to ensure funds are applied in a timely manner. Unapplied funds could result in an account being mistakenly reported as being in default.

To ensure court orders are adhered to regarding the posting of incoming funds throughout the bankruptcy, servicers must have systems capable of tracking incoming funds, as well as designating whether these funds are for post-petition payments or pre-petition arrears.

Post- and pre-petition funds should be tracked separately.

Upon discharge of all bankruptcies with plan payments, an audit should be conducted to ensure all funds received were accurately applied.

Clear treatment of Chapter 7 post-discharge accounts should be outlined in servicer’s policies and procedures.

Policies and procedures should be updated immediately in the event of any regulatory change.

Documentation of handling foreclosure prevention alternatives for Chapter 7 post- discharged and non-reaffirmed loans.

Training regarding the proper handling of Chapter 7 post-discharge loans should be provided to employees who service these accounts.

Routine audits should be performed to ensure treatment of Chapter 7 post-discharge loans are being handled in a manner consistent with federal bankruptcy law.

Updated reports of Chapter 7 post-discharge loans should be maintained to track status and ensure proper handling.

Alternatively, the account should be clearly marked as a Chapter 7 post- discharge loan in the servicer’s systems.


7.3.1 Timeline Management> Bankruptcy

Ev aluation and Recommendations

7.3.2 Foreclosure

CSF: 7.3.2.1 Foreclosure Initiation: Ensure loans are appropriately reviewed prior to initiating foreclosure, foreclosure is initiated in a timely manner and the completeness and accuracy of referral packages sent to the foreclosure attorneys.

Assessment: Pre-referral to foreclosure review on loans determined eligible for foreclosure

Servicers must conduct a pre-referral to foreclosure review within the requirements and timeframe established by the Fannie Mae Servicing Guide. The servicer must confirm the breach letter expiration and the Borrower Solicitation Package deadline expiration without affirmative response from the borrower.

Foreclosure: Foreclosure Initiation: Pre-referral to foreclosure review on loans determined eligible

for foreclosure

Evidence

Documentation of pre-referral to foreclosure review process

Sample checklists used to review loan eligibility f or foreclosure

Exception reports used to track loans in the pre-referral to foreclosure review process

Assessment: Timeliness, completeness and accuracy of the foreclosure referral package

Servicers must provide the foreclosure attorney with a complete and accurate foreclosure referral package in a timely manner, and work with the attorney to determine the documents required in the particular jurisdiction.

Currently, servicers are required to provide all appropriate documentation and mortgage loan status data for each case that is referred to a foreclosure attorney in adherence with Fannie Mae Servicing Guide requirements. Additionally, servicers must respond to requests from attorneys for additional information or documents within the Fannie Mae guideline timeframes.

Foreclosure: Foreclosure Initiation: Timeliness, completeness and accuracy of the foreclosure referral

package

Evidence

Sample foreclosure ref erral package checklist

Documentation of the f oreclosure ref erral process including executing any foreclosure documents needed f or the ref erral

Sample exception reports used to ensure complete and accurate referral packages w ere sent to the foreclosure attorney


7.3.2 Timeli ne Management > Foreclosur e


A pre-referral to foreclosure process should be in place to ensure loans are appropriately reviewed for foreclosure eligibility.

Maintain a pre-referral to foreclosure review process that is in compliance with statutory, regulatory, and Fannie Mae requirements.

Perform routine audits on files approved for foreclosure initiation to ensure accuracy and timeliness.

Foreclosure referral packages sent to the attorneys should contain all the necessary documents needed to initiate the foreclosure in adherence to statutory and investor requirements.

Implement a referral checklist or matrix to show documents needed to initiate foreclosure for each state.

Conduct regular audits to ensure referral packages contain the correct documentation.

CSF: 7.3.2.2 Timeline Management and Reporting: Maintain an accurate foreclosure timeline and status tracking system as well as all related foreclosure documentation.

Servicers should implement a system that tracks foreclosure status to expected timelines. The STAR Program rates servicers on their ability to efficiently and effectively manage foreclosure timelines.

Assessment: Adherence to Fannie Mae foreclosure timelines and reporting requirements Foreclosure timelines for each state are published by Fannie Mae on

www.FannieMae.com.

Foreclosure: Timeline Management and Reporting: Adherence to Fannie Mae foreclosure timelines and reporting requirements

Evidence

Reports on foreclosure loans that do not meet Fannie Mae guidelines

Reports tracking aged title exceptions and curative title action

Assessment: Monitoring attorney performance

Foreclosure: Timeline Management and Reporting: Monitoring attorney performance

Evidence

Methodology to ensure w orkload balancing betw een attorneys

Sample vendor performance scorecards including service level agreements


http://www.fanniemae.com/



Servicer must efficiently and effectively manage foreclosure timelines. Foreclosure loans do not exceed estimated/required foreclosure timelines

within each major milestone. Conduct routine audits of selected attorneys to ensure accurate and timely

processing of foreclosure events.

To ensure the servicer complies with the guidelines, effective exception handling procedures should be in place.

Generate frequent, automatic, and comprehensive management reports on all foreclosure cases.

Reports should address issues such as holds, postponements, missing documents, and any other issues that impede timely progression of the foreclosure process.

Servicer is expected to meet all Fannie Mae foreclosure timeline guidelines. When a title issue is identified, servicers should work to take immediate and curative

action, in order to prevent delays and interruptions in foreclosure timelines. Servicers should have vendor performance scorecards in place to monitor

timelines and service level expectations. Servicer should have established service level agreements with vendors which detail performance level expectations and consequences when service level agreements are not met.

CSF: 7.3.2.3 Process Management: Servicers have processes that support, facilitate,

and monitor foreclosure attorney inquiries and communication response times with the servicer's foreclosure function. Continuous foreclosure attorney and servicer feedback minimizes response turn-around time and foreclosure delays.

Servicers must have written policies and procedures requiring a review of delinquent mortgage loan files prior to the scheduled foreclosure sale within Fannie Mae guidelines. Servicers must reviewthe mortgage loan history to verify compliance with all required delinquency management requirements, and that no approved payment arrangement or foreclosure prevention alternative offers are pending or accepted.

If the servicers find that all required delinquency management requirements have not been met or an approved payment arrangement or foreclosure prevention alternative offer is still pending, the servicers must fulfill the delinquency management requirements or resolve outstanding offers prior to the foreclosure certification date.



Assessment: Pre-foreclosure sale management and oversight

Foreclosure: Process Management: Pre-foreclosure sal management and oversight

Evidence

Procedures and checklists used f or pre- foreclosure sale review

Sample procedures and checklists to verify that state, federal, and required mediation options and foreclosure prevention initiatives have been addressed prior to completion and f inalization of foreclosure

Documentation for handling holds, postponements and cancellations

Assessment: Attorney management

Foreclosure: Process Management: Attorney management

Evidence

Process to communicate betw een foreclosure attorney and servicer foreclosure department, addressing attorney inquiries and communication feedback, follow up and response times w ith the servicer f foreclosure area


Servicers must efficiently and effectively manage the foreclosure process. Develop procedures for preparing and executing foreclosure-related documents

required during the foreclosure process. This includes defining the appropriate levels of authority for document execution, timeframe for execution, and a quality control process.

Implement procedures to effectively manage holds, postponements and cancellations.

Servicers must review and approve all attorney fees and costs to ensure they are compliant with Fannie Mae guidelines on services performed, maximum allowable attorney fees and costs, and the excess fee request process.

Prior to approving attorney fees and costs, servicers must ensure all foreclosure services are performed in accordance with applicable law and professional standards.

Conduct regular audits on foreclosure fees and costs, and excess fee requests submitted by attorneys to ensure compliance with Fannie Mae guidelines.



7.3.3 Timeli ne Management > Property Preservation and Post Forec losure Management

7.3.3 Property Preservation and Post Foreclosure Management

CSF: 7.3.3.1 Preserving, Protecting and Maintaining Fannie Mae Collateral: Perform regular ongoing property inspections, maintenance and preservation. The servicer must manage the property until it is conveyed to the insurer or guarantor or until Fannie Mae assigns that responsibility elsewhere. The servicer must take whatever action is necessary to protect the value of the property. This includes making sure that no apparent violations of applicable law occur on the property (such as violations of laws relating to illegal narcotics and similar substances) and that the property is protected against vandals and the elements.

Servicers must cancel hazard insurance coverage within 14 days of appearing on the vacancy report located on HomeTracker.

Assessment: Properly maintain property condition through inspection, preservation and maintenance

Property Preservation and Post Foreclosure Management: Preserving, Protecting and Maintaining Fannie Mae Collateral: Properly maintain property condition through inspection, preservation and

maintenance

Evidence

Documentation of property inspection and preservation processes including managing code violations and seasonal preservation requirements.

Sample exception reports f or property inspection and preservation

Vendor scorecards f or outsourced property preservation, property inspection and hazard claim f ti if li bl


Proper procedures should be in place for managing property inspections, property preservation and post- foreclosure hazard insurance. In addition, servicers should have processes to control the volume of code violations at the time of conveyance and the number of unresolved issues involving property conditions.

Maintain the REO property’s condition and appearance. This includes securing the property, mowing the grass, removing trash and other debris, and winterizing the property, etc. Maintain property condition in accordance with applicable laws and repair items that pose a health or safety hazard.

Manage the REO property until it is conveyed to the insurer or guarantor or until Fannie Mae assigns that responsibility elsewhere.

Take additional actions necessary to protect the value of the property. Vacant properties should be secured by changing exterior locks, securing all windows and exterior doors, repairing fences, and otherwise securing potentially dangerous areas and related facilities. Properties should not be boarded unless absolutely necessary to prevent vandalism or to secure the property, or where required by law.



Documentation for hazard insurance processes include claim filing, change of risk letters, use of Fannie Mae’s form 176 when applicable, and report used to track outstanding hazard insurance claims and disbursements.

Property preservations exception reports include, but are not limited to, inspections not completed, late inspections, over allowable bids, and denied over allowable bids due to servicing violation.

CSF: 7.3.3.2 Post Foreclosure Review: Notify Fannie Mae of completed foreclosures in a timely and accurate fashion.

Assessment: Fannie Mae guidelines for REOgrams are always met

Servicers are required to submit REOgrams within 24 hours following foreclosure sale or Mortgage Release™ recorded in accordance with Fannie Mae guidelines. The servicer should also ensure that the information provided in the REOgram is complete and accurate.

Property Preservation and Post Foreclosure Management: Post Foreclosure Review: Fannie Mae

guidelines for REOgram s are alw ays m et

Evidence

Servicer provided REOgram information to Fannie Mae on all REO cases f or the reporting period

Documentation of procedures used to manage REOgram submissions

Assessment: Servicer elimination/rescission notifications

When an issue is identified by the servicer or Fannie Mae that requires the elimination of a REOgram, Fannie Mae guidelines require servicers to send a Servicer Elimination/Rescission Notification in timely manner.

Upon elimination/rescission of the sale, the servicer is responsible for transferring title into the appropriate party’s name and removing Fannie Mae from title. The servicer must initiate any required steps to restore title to the appropriate party within Fannie Mae established timeframes. In addition, the servicer must adhere to specific local and state law recordation timeframe requirements, as applicable.

Property Preservation and Post Foreclosure Management: Post Foreclosure Review : Servicer

elim ination/rescission notifications

Evidence

Sample exception reporting to ensure service elimination notif ications are completed timely and accurately.

Documentation of processes to manage eliminations/rescissions to comply w ith Fannie Mae

guidelines.




REOgrams should be accurate, complete, and submitted with required information within the 24 hour timeline. Adequate staff and processes should be in place in order to fulfill this goal.

Assign dedicated staff to support Fannie Mae’s REOgram requirements. Create and maintain a checklist and related control processes to ensure all required

information is submitted the first time.

If not fully automated, create automated triggers to alert responsible personnel of impending REOgram submissions.

For REOgram eliminations/rescissions, servicers are assessed on timely and accurate submission.

Assign dedicated staff to handle notifications to fulfill requirements.

Implement and maintain a tracking system to ensure required actions are promptly resolved.

Conduct regular audits to ensure required REOgram data is submitted in an accurate and timely manner.

CSF: 7.3.3.3 Title Exceptions: Clear title to enable property transference

Assessment: Conveyance of clear and marketable title to Fannie Mae

Title vesting exceptions should be cleared within Fannie Mae established guidelines. If title defects are discovered, the servicer must notify Fannie Mae of the issue(s).

Property Preservation and Post Foreclosure Management: Title Exceptions: Conveyance of clear

and marketable title to Fannie Mae

Evidence

Sample exception reports f or tracking titles issues

Documentation of processes used to manage title exceptions, including HOA, taxes, foreclosure deed, and vesting.


Quantity of exceptions and resolution timelines are within stated guidelines.

Adequate staff and processes should be in place to fulfill this requirement. Assign dedicated staff to address all exceptions. Maintain procedures for handling title exception escalations. Implement and maintain a tracking system to ensure required actions are

promptly followed in every case.


February 22, 2017 Version 1 - ADFINET · 5.4 Operational Assessment Overview ... 6.1.2.2 Process...

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