On today’s sponsored episode, Editor in Chief Sarah Wheeler talks with Donna Spencer, vice president of servicer relationship and performance management at Freddie Mac, to discuss their new Servicing Excellence initiative and the benefits for their partners.
Related to this episode:
Servicing Excellence
https://sf.freddiemac.com/articles/insights/servicing-excellence
Forging a New Path: The Future of Servicing Excellence
https://sf.freddiemac.com/articles/insights/forging-a-new-path-the-future-of-servicing-excellence
Stay Up to Data: Automating Servicing for Sustainable Homeownership
https://sf.freddiemac.com/articles/insights/stay-up-to-data-automating-servicing-for-sustainable-homeownership
Enjoy the episode!
The HousingWire Daily podcast brings the full picture of the most compelling stories in the housing market reported across HousingWire. Each morning, listen to editor in chief Sarah Wheeler talk to leading industry voices and get a deeper look behind the scenes of the top mortgage and real estate stories. Hosted and produced by the HousingWire Content Studio.
Related to this episode:
Servicing Excellence
https://sf.freddiemac.com/articles/insights/servicing-excellence
Forging a New Path: The Future of Servicing Excellence
https://sf.freddiemac.com/articles/insights/forging-a-new-path-the-future-of-servicing-excellence
Stay Up to Data: Automating Servicing for Sustainable Homeownership
https://sf.freddiemac.com/articles/insights/stay-up-to-data-automating-servicing-for-sustainable-homeownership
Enjoy the episode!
The HousingWire Daily podcast brings the full picture of the most compelling stories in the housing market reported across HousingWire. Each morning, listen to editor in chief Sarah Wheeler talk to leading industry voices and get a deeper look behind the scenes of the top mortgage and real estate stories. Hosted and produced by the HousingWire Content Studio.
Category
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NewsTranscript
00:00Welcome, everyone. My guest for this sponsored episode is Donna Spencer, Vice President of
00:11Servicer Relationship and Performance Management at Freddie Mac, to discuss their new Servicing
00:16Excellence Initiative and what that means for their partners. Donna, welcome to the podcast.
00:22Thank you so much. It's a pleasure to be here with you today.
00:26We're really excited to have you, and I'm really interested in this topic. So Freddie Mac recently
00:31announced a new initiative, Servicing Excellence. Can you tell us how you would define Servicing
00:36Excellence and what it means to you? Sure. Servicing Excellence is our
00:41initiative to really elevate and strengthen the servicing industry. We have top quality performance
00:49that we're expecting from Freddie Mac, and we're also expecting that performance from our servicing
00:54stakeholders. It's our commitment really to quality and progress, but not only to enhance
01:01Freddie Mac, but also lift up all of those that are around us in the mortgage servicing ecosystem.
01:08As you know, servicing is a multifaceted complex and very integrated, and it runs across multiple
01:16dimensions. And we believe that cultivating a culture of innovation and accountability is key
01:23to meeting the evolving needs of servicers and homeowners and driving lasting change.
01:29We've curated trusted partnerships in the journey towards lasting success. I also like to emphasize
01:37under this initiative, we've recently introduced new programs to further strengthen our commitment
01:43to delivering servicing excellence in alignment with our mission statement. One of them is a
01:48Servicing Success Scorecard. Again, this is something that you'll see with us with Servicing
01:54Excellence. We're taking the things that we've used in the past and really figuring out how we
02:02can elevate them to the next level. And that's what you'll experience with the enhancements that
02:07we've made to the Servicer Success Scorecard. Well, let's dig into that a little bit. Tell us
02:14what's changing when it comes to the Servicer Success Scorecard. Sure. In 2025, we'll be making
02:21some changes to the Servicer Success Scorecard, including updates to metrics. Metrics including
02:28the fixed metric weighting, the rank grouping, and the control variables. These changes are really
02:37designed to use early intervention and monitor homeowner outreach to help encourage servicers
02:43to reduce the number of loans that are progressing further in the delinquency cycle.
02:48Specific updates are to the first six default metrics, one of which includes one of the
02:55supplemental metrics that we're elevating up and adding weighting to, and that's the current
03:01to D30 metric. Some of these metrics defined will be changed and other metrics will be replaced.
03:08We're scheduling these changes to go into effect in late April, April 2025 for the March
03:16scorecard cycle. And in August, we'll also be rolling out some additional changes for the July
03:23scorecard cycle. Why is Freddie Mac looking to change the analytics and how you use the data?
03:30Really, modifying the Servicer Success Scorecard allows us to better measure and manage risk.
03:37And it also creates opportunities for sustainable homeownership. As we look at
03:43placing a greater emphasis on the earlier stage of delinquency and the effective strategies
03:50employed to offer permanent solutions to homeowners, these are lasting changes
03:56that are supporting our servicing excellence mission. Lastly, I want to add there is a focus
04:04on reducing seriously delinquent loans, which we consider SDQ. And it also will incorporate
04:13reducing the operational costs for our servicers and reducing credit losses for Freddie Mac.
04:20What sort of an impact do you think this new initiative will have on servicers? And
04:24how about homeowners? Sure. We definitely believe that
04:29there's going to be an impact, a positive impact on our servicers. And we believe the
04:35new weighted metrics will really encourage servicers to manage early delinquent loans.
04:41And they'll actually get credit for their work. Many of these servicers have been doing their
04:46work already and putting a lot of time and energy into managing loans in the current status
04:54to prevent them from rolling. So now they'll get the credit on their scorecard.
04:59And for homeowners, we'll say that early intervention is always best. The earlier we
05:04can help identify where there are issues, the greater possibilities and outcomes there are
05:10for homeowners. The later that a homeowner waits to get involved, the number of options
05:17really start to diminish. And again, we're focusing on sustainable homeownership for
05:24these homeowners. And we really want to align all of this to this initiative.
05:32Why do you think now is a good time to really focus on servicing?
05:38Servicing is really a cornerstone of the business. And there's no greater time than now.
05:48There's so many things economically happening in the environment. We really want to take this
05:54opportunity to, again, focus on our mission, our goals, and get our servicers kind of rallied
06:04around this activity with us. Can you share some key takeaways for the listeners?
06:10So, you know, one of the things I really want, you know, our listeners to focus on
06:14is our data and the scorecard is really just a tool for us to directionally have a conversation
06:22and make some alignment on where we believe you should be focused. You know, we've spent
06:28in historical years, you know, a lot of time reconciling the number of loans that
06:37fell outside of the metric and trying to help servicers identify, you know, how many loans
06:47they were off from meeting the performance threshold that we started. And we really
06:52don't want to do that for this year. This, again, these scorecard and metric changes
06:58really are about directionally, where are we going? The results are the results in the scorecard.
07:05We really want people to think about not the one loan or the two loans or the three loans that
07:10they missed the threshold by, but really what are we going to do together to help be better
07:18in the next cycle and globally understand what can be done? So, you'll see a, servicers, you'll
07:27see a directional shift on how my team engages with you and how we're really trying to work
07:33together to transform the business to really drive down, again, I say those operational costs
07:39and drive down SDQ this year and beyond. I think it's an interesting time to do this because we
07:46always talk about, like, when the industry is in the thick of, like, things are going fast and
07:51furious, that's not really the time to try to implement new things or, you know, new policies,
07:58whatever it may be, processes. But in a time like this where, you know, historically delinquencies
08:04are very low still, and we are seeing a rise in some things, but, like, this is a great time to
08:09be, like, let's gear up and be ready for whatever might be coming next. Absolutely. You're absolutely
08:15on point. And, you know, that's one of the things that we've been doing over the past couple of
08:21years is kind of once the housing crisis has settled and we really rolled into what we call
08:28our new normal, it was a time to kind of look around and say, are we really prepared for
08:35another crisis? What types of things do we need to do? As I mentioned about one of the key metric
08:42changes, the current to 30, we've heard a lot of feedback from our servicers that that's something
08:49that, you know, although we've had it on our scorecard for years, it's been a non-weighted
08:56supplemental metric, and they feel like they're doing a lot of work in that space, and we agree,
09:01and it aligns with where we're going with our goals and our mission. So we are making some of
09:08those changes, and we'll continue to look around our ecosystem to see what other things can we do
09:17to help Freddie Mac and our servicers be prepared for the next wave or cycle,
09:24whatever that may look like. So it was, again, all of these changes were met with open arms,
09:33and, you know, we're really looking forward to working with our servicers in this next new phase
09:40of servicing excellence. I love that because I know that, you know, anyone who's involved
09:45in mortgage or servicing or anything, and the cyclicality of it is one of the biggest challenges.
09:51It's like we're inundated. Oh, we're, you know, it's a desert. It's a, you know, it's a full
09:56feast. It's, oh, we have nothing to eat. So it's like anything that can help make things better
10:02so that those things are more evened out or streamlined, I think, is such a benefit for
10:06servicers. Absolutely, absolutely, and we agree completely. I, my hope is, you know, over these
10:15next few months, servicers will begin to really feel and experience our initiative around servicing
10:24excellence and, you know, understand that our actions and our decisions are going to be anchored
10:31around the servicing excellence pillars, which are homeowners, investors, servicers, and Team
10:39Freddie. And we're excited about all of the things that we're going to do together this year and
10:46beyond. And, you know, frame that under servicing excellence and just watch the community flourish.
10:56I am sure that, you know, this is very well received by the servicers because
11:01just the way that things ebb and flow, as you said, is such a challenge. So any of their partners
11:06that can help them do that right now is always such a help because then it's like, you know,
11:13it streamlines it, it flattens it out. It's not so disruptive. Yes, absolutely. You know, as I
11:20mentioned earlier about one of the key metrics that we're changing is the current to 30 metric.
11:27Servicers have been asking for this for a while, and it really now aligns with our goals, our
11:34mission around servicing excellence and our focus on early delinquency. And we really want to
11:42reward servicers for doing all of the work, making all of the investments to keep loans current
11:49and prevent them from rolling to a delinquent state and, in particular, rolling to a seriously
11:55delinquent state. So now is the time to really focus on, you know, what we can do in this space
12:03when, you know, times are kind of slow, delinquency rates are good. And we'll continue to look across
12:11the ecosystem to see where we can make changes that will influence the mortgage industry and
12:21help our servicers as well as helping Freddie Mac and its investors.
12:26Anything else you want to share with our listeners?
12:28Sure. I just want to let folks know that we're not done. You know, we'll continue to refine our
12:34tools. We'll look for additional opportunities. We're looking at, you know, additional APIs that
12:41we might add to our tool set. We'll refine all the things that we collected during our insight
12:47sessions and continue to find excellence in everything that we do. You know, I want to
12:53reiterate to servicers that you should expect a continuation of what you've seen and experienced
13:00through the reimagined servicing journey that we retired just last month. We're going out and we're
13:06going to expect more of our servicers. We're going to deepen those partnerships and relationships.
13:14We'll add clarity where clarity is needed and refine our expectations. You know, our commitment
13:21to working with you is unchanged and actually, you know, under this umbrella of servicing
13:29servicing excellence, you should see an enhanced over the next few months and, you know, into the
13:35years to come. Donna, thank you so much for having this conversation. It's an important one. Really
13:41enjoyed it. Yes. Thank you so much for this interview and this time commitment and, you know,
13:48excited to see what we can do with our servicers, you know, in this new space of servicing excellence.