Editor’s note: This feature originally appeared in the July issue of DS News, out now.
As mortgage servicers know, there may be times when homeowners encounter stressful situations that can make it difficult for them to pay their mortgages. Whether due to a natural disaster, a personal or family hardship such as a death in the family, or the loss of a job, when these situations occur, homeowners need counseling, guidance, answers, and solutions—fast.
The experience and insights provided by servicers from across the country is allowing Freddie Mac to spearhead efforts to reimagine and improve loan servicing. This process involves implementing technology and tools that will provide servicers with better data, faster response, updated policies, and improved processes designed to reduce costs, minimize credit loss, and promote a better, more timely experience for servicing partners and their homeowner clients.
Freddie Mac’s “Reimagine Servicing” initiative is focused on four goals:
- Transforming the client experience
- Improving efficiency
- Innovation and speed to market
- Reducing costs
Servicers want and need background data. They want to understand the big picture when a homeowner encounters trouble, and better data can help them make the best decisions for all interested parties. Servicers know that data drives much of the servicing process— from reporting and analysis to technology optimization and insight—but ultimately, it drives the basis of good customer experience and positive portfolio outcomes.
In response to these needs, Freddie Mac is leveraging data-focused solutions to ensure that our servicers have the state-of-the-art tools needed to drive success. These initiatives are focused in three key areas:
1. DATA-DRIVEN TIME REDUCTIONS THAT DRIVE OPPORTUNITIES FOR EFFICIENCY.
Through data collection and analysis, Freddie Mac is targeting time-draining manual documentation efforts as an opportunity to speed default-related processes and reduce the need for multiple requests for a loan prior approvals that often delay loan servicing processes. Servicers have told us that these advanced technology changes offer process improvements leading to faster solutions that benefit them.
2. DATA-DRIVEN INSIGHT AND REPORTING SYSTEMS THAT DRIVE AN ADVANCED SERVICER AND HOMEOWNER EXPERIENCE.
Analysis of Insights from our servicing partners continue to help us improve default management and servicing technology. Using new technology that identifies and evaluates patterns and themes, we are working to create data opportunities to transform the servicer experience while also supporting improvements to the homeowners’ experience throughout the loan life cycle.
3. DATA-DRIVEN MANAGEMENT EFFICIENCIES THAT DRIVE BETTER EXECUTION AND RESULTS.
Advanced technology efforts will eventually eliminate the servicer’s burden for loan status updates and remove redundant data reporting. We’re working with our industry partners to acquire homeowners’ data from outside data providers in order to piece together information on each property in a servicer’s portfolio.
The housing industry as a whole has seen a decline in the number of seriously delinquent loans over the past eight years. At the end of 2018, Freddie Mac’s seriously delinquent mortgage rate was just 0.69%. At the end of 2010, the total mortgage market’s seriously delinquent loan rate for single-family homes reached a high of 8.6%, while Freddie Mac’s seriously delinquent rate was 3.84%.
Fast-forward to eight years later and, in December 2018, the total mortgage market seriously delinquent loan rate for single-family homes had lowered to 2.13%, while Freddie Mac’s December 2018 seriously delinquent single-family loans fell to 0.69%, according to the latest data points available on this specific loan information.
Freddie Mac will continue to leverage data and advanced technology tools to make it easier for servicers to help their customers. These tools are provided to our servicers at low to no cost to ensure that each servicer has access to the same tools, thereby avoiding duplication and increasing efficiencies while reducing cost.