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Th e M Rep o RT | 43 O r i g i nat i O n s e r v i c i n g a na ly t i c s s e c O n da r y m a r k e t SERVICING the latest FHFa issues seller/ servicer eligibility requirements, requests input for House Price index The new operational and financial standards are set to launch beginning next month. t he Federal Housing Fi- nance Agency (FHFA) recently announced that Fannie Mae and Freddie Mac will issue new op- erational and financial eligibility requirements for all current and potential single-family mortgage sellers and servicers. The new operational requirements are expected to go into effect August 18, and the financial requirements on December 31 for Freddie, and by September 1 and December 31 for Fannie. "The new seller/servicer eligibil- ity standards announced today incorporate the lessons of the recent housing crisis and reflect the expanding role of non-bank servicers in the mortgage indus- try," said Dave Lowman, EVP of single family business at Freddie Mac. "These new standards are intended to improve the cus- tomer experience for borrowers and mortgage investors alike by establishing common-sense servic- ing benchmarks for operational efficiency and financial strength." As part of the FHFA's 2014 and 2015 conservatorship score- cards for the GSEs, the agency directed the GSEs to update their counterparty standards for mortgage servicers, according to a FHFA release. This was done in response to the many changes taking place in the servicing industry. The new requirements are expected to allow the GSEs to operate smoothly by provid- ing greater transparency, clarity, and consistency to industry par- ticipants and other stakeholders, and reflect feedback received over the past several months. "These updated operational and financial requirements will help mitigate risks associated with changes in the servicing industry," said Melvin L. Watt, FHFA director. "Strengthened Enterprise servicer counterparty standards should also improve access to credit and protect tax- payers by reducing market un- certainty about the Enterprises' expectations for mortgage servicer counterparties." Sellers and servicers will be able to access the GSEs' up- dated operational and financial requirements in their respective guides, bulletins, and announce- ments and through best practices documents that provide servicers clarity about GSE expectations. The FHFA also sent a notice and request for input to the Federal Register for a method of addressing the national average single-family house price for use in setting the conforming loan limits of the GSEs, according to a news release by the agency. It is required that the FHFA "establish and maintain" a house price index for the GSEs by the Housing and Economic Recovery Act of 2008. The expanded-data House Price Index is released every quarter and includes sales price information from both GSEs, the Federal Housing Administration, and county recorder offices. The input request will help the FHFA decide whether or not to use this index as a source for adjusting the GSEs' conforming loan limits. HFPc Panel addresses servicing Hot topics Attendees touched on a variety of servicing subjects, with regulatory issues (unsurprisingly) generating plenty of buzz. m ortgage service regulations have not yet fully caught up with significant industry changes over the past five years, according to an Urban Wire blog post by the Urban Institute and author Karan Kaul. In her post, Kaul summarizes the key topics discussed during a recent Housing Finance Policy Center (HFPC) seminar centered around mortgage servicing trends and moderated by CoreLogic's Faith Schwartz. The panel Schwartz moderated including Michael Drayne, SVP at Ginnie Mae; Stephen Fleming, SVP at Phoenix Capital; and Laurie Goodman, HFPC director, among others. According to Kaul, topics discussed by the panel included the rise of non-bank mortgage servicers, the difference between non-bank servicers and large bank servicers, and the hot- button topic of industry reaction to current regulations. Under the topic of regulation, Kaul notes that one of most im- portant takeaways was that due to "regulatory uncertainty and a broken servicer and compensa- tions model access to credit is tight." Kaul cites statements made by Goodman during the seminar that the high cost of servicing non-performing mortgages and regulatory uncertainty regard- ing the treatment of delinquent borrowers have made lenders cautious of making loans, even if the risk of default is slim. Other factors such as long foreclosure delays in judicial states, onerous, and arcane foreclosure guidelines, and at times different servicing requirements from different regu- lators have only made it more difficult to obtain credit. Mortgage servicing regula- tion is a difficult regulation to control, Kaul notes. Improper foreclosures, the robo-signing scandal, and servicer settle- ments with government au- thorities are all real borrower concerns. Conversely, regula- tion that is inconsistent, overly prescriptive, and poorly targeted also drives lenders away and creates uncertainty. This pushes lenders away from low-income and less creditworthy borrowers..