Good: Objective Servicer Quality Measurement. Bad: Consumers Can't Act On This Information
Bills.com readers frequently report that mortgage servicers — including Bank of America, Wells Fargo, Chase, and Citi Mortgage — often offer abysmal customer service, especially if the borrower seeks a mortgage modification. Such examples of poor customer service include:
- Requiring borrowers to submit the same documentation repeatedly
- Inability to estimate when the borrower can expect a modification decision
- Foreclosing while a modification is under consideration
- Reliance on NACA to counsel borrowers seeking a modification
- Unpublished modification criteria
- Inconsistent application of known modification criteria
- Opaque processes
- Abysmal modification completion rate on otherwise qualified distressed borrowers
- Non-compliance with Making Home Affordable deadlines and guidelines
- Customer service representatives unable to answer basic questions about available foreclosure prevention programs
In late February 2011, Fannie Mae, which buys about 60% of all mortgages today with its fellow government-sponsored enterprise Freddie Mac, announced a program to "measure and evaluate mortgage servicers' performance in supporting the housing recovery by helping homeowners avoid foreclosure." The program will be called the Servicer Total Achievement and Rewards (STAR).
According to Fannie Mae, "The STAR program provides clear expectations and specific, consistent measurements to help Fannie Mae servicers increase focus on areas of critical importance to Fannie Mae. The program directly links servicer performance to homeowners the servicer has helped, and the customer’s experience with their servicer."
A component of STAR is the Servicer Performance Scorecard, which gives monthly performance snapshots and trends for key performance indicators to help servicers assess their progress. Top-ranked servicers will be eligible to receive incentive awards and recognition. Rankings of top performers will be made available to the public in an annual scorecard.
Fannie Mae is using the scorecard and 2010 data to show servicers how well they met performance goals in this area over the past year. Current scorecard information will be transmitted to servicers each month.
Bills.com’s Take on STAR
Today, it is difficult to get objective information on overall mortgage servicer performance. (This is why we launched the Home Loan Lender Reviews and Lender Profiles section at Bills.com.)
If Fannie Mae is able to gather objective, quantifiable data about servicer performance and rank servicers by their performance, this data may spur bottom-dwelling servicers to improve their performance. This, in turn, will benefit consumers.
Unfortunately, Fannie Mae plans to release data to the public on an annual basis, which will provide little incentive for the servicer’s to improve. After all, it is easier to ride-out one bad press release from Fannie Mae than it is a drumbeat of monthly or weekly string of announcements by a GSE telling the public your mortgage service performance is terrible.
Also, the short-term benefit to consumers is... nothing. Unfortunately, once a consumer signs their mortgage documents the servicing of the mortgage is completely out of their hands. The mortgage investor usually shops the mortgage around to various servicers, and picks the one with the lowest costs or greatest benefits to the investor. Borrowers have no choice in which servicer the investor chooses. Perhaps servicing will improve if Congress required servicers to compete for a consumer’s business every year or two, in much the same way that health insurers have an open enrollment period.