Within the past three weeks, lenders have had some good news relative to some system upgrades which will enhance their reliance on tracking reports that are essential for the overall monitoring of loan performance.
On August 11, 2015, Fannie Mae announced that their Reps and Warrants Tracking Reports have been substantially upgraded to assist lenders in the identification of loans that have achieved sunset relief of many of the Reps & Warrants (R&W) obligations.
Specifically, instead of just listing loans that have achieved full or conditional relief from R& W obligations based on payment history, these reports will now also include those that have satisfactorily passed a full-file quality control review by Fannie Mae.
In addition, these reports will now be cumulative and not just reflect the monthly activity and will provide more detailed information about loans with conditional relief.
On August 17, 2015, HUD/FHA’s Neighborhood Watch (NW) system (which had been down for almost three weeks) has been modified to reflect a lender’s “Supplemental Performance Metric” score.
The NW system is used by lenders to monitor claims and defaults, obtain their Compare Ratio, assess their overall book of business & loan performance, track FHA loan volume, monitor Branch Office performance, etc.
FHA has stated that “the new Supplemental Performance Metric is designed to help mitigate adverse selection away from borrowers with certain credit profiles”. In this regard, FHA now tracks defaults/claims in three separate categories:
- For borrowers with credit scores below 640
- For borrowers with credit scores between 640-680 and
- For borrowers with credit scores above 680.
A “mixed-adjusted default rate” is then calculated which factors into the overall Supplemental Performance Matrix. This Supplemental Performance Metric will be considered as an additional factor in a lender’s total evaluation when FHA is considering initiating Credit Watch sanctions.
Lenders are encouraged to access the Neighborhood Watch system and review their Supplemental Performance Metric TODAY!
Also, FHA officially opened its long-awaited Electronic Appraisal Delivery (EAD) portal for lenders to register and participate in one of the onboarding phases. This is the system in which lenders will be electronically transmitting appraisals to FHA. The targeted date for mandatory usage of this portal will be June 27, 2016.