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GSEs Update Servicing Requirements

As part of the ""Servicing Success Program,"":http://www.freddiemac.com/sell/factsheets/pdf/servicing_success_program_factsheet.pdf Freddie Mac and Fannie Mae are aligning their expectations for servicers regarding a variety of criteria. However, while basic criteria will align, the weights and targets for various criteria may differ between the GSEs, according to an ""announcement"":http://www.freddiemac.com/singlefamily/news/2012/1003_servicer_bulletin.html from Freddie Mac.

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Freddie Mac recently released ""Bulletin 2012-20"":http://www.freddiemac.com/sell/guide/bulletins/pdf/bll1220.pdf to detail changes to the Servicer Success Scorecard, repurchase timelines for servicer violations, updates to compensatory fee requirements, and revisions to the GSE's servicer termination and transfer requirements.

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Servicer scorecards will include a ""Workout Effectiveness"" category, and changes will be made to the current loss mitigation and default timeline sections.

The revised scorecard will continue to focus on ""data integrity"" and ""accuracy and effectiveness in data and edits when reporting through electronic default reporting (EDR) and reporting foreclosure sales.""

Other scorecard changes include eliminating the custodial account review measurement and expanding the three current data integrity and operational management sections to six categories.

Servicers will face increased compensatory fees for ""contract noncompliance, REO rollback, and aged data errors,"" and revisions will also be made to various other compensatory fees.

A few new categories of compensatory Freddie Mac announced include ""Unauthorized Transfer of Servicing and Unreported Transactions and Loan Simulation.""

A few compensatory fees are also being eliminated completely, including Balloon/Reset, Referral to Non-retained Attorneys, and Research and Reconstruction.

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