Some of the nation’s top banks including Bank of America and JPMorgan Chase – which also rank first and third, respectively in terms of housing receivables – flunked Fannie Mae's latest test of mortgage servicers, but the GSE isn’t exactly saying that.
Fannie this week praised mortgage servicers that are making progress in helping homeowners avoid foreclosure, according to a new ranking system Fannie created in February.
But only four of the 11 largest servicers in the U.S. are on track to receive an "at least median performance" for the first half of the year, Fannie said. Those companies are: Citigroup, Wells Fargo, Ally Financial and Everhome Mortgage.
But Fannie refused to identify the underperforming servicers by name. Instead, a spokesman provided a list of "peer groups" listing the servicers it assessed in each category. Fannie puts Citigroup and the other successful servicers in a peer category along with BofA, JPMorgan Chase, and five others that also did not make the grade: MetLife, OneWest Financial, PNC Financial Services Group, Sovereign Bank and SunTrust Banks.
As reported by ASR sister publication National Mortgage News, Fannie has forced BofA to sell large blocks of legacy MSRs because it has been unhappy with how the bank has serviced these ‘high touch’ loans. Over the past three years both Fannie and Freddie Mac have forced other servicers to unload problem MSRs due to poor servicing performance.
A Fannie spokesman said it is only releasing the names of those servicers that met its minimum requirements.
"We're trying to provide an incentive," to meet the standards, said spokesman Andrew Wilson. "We want to recognize those who are leading the way in working with homeowners to prevent foreclosure."
Leslie Peeler, Fannie's vice president for servicer portfolio management, said in a press release Wednesday that the rankings help Fannie "evaluate and hold servicers accountable for measurable, consistent results in preventing foreclosure."
Peeler, a former trader at GMAC's Residential Capital mortgage unit, has not said how servicers would be "held accountable." Wilson said she was not available for an interview.
In a second peer group of slightly smaller servicers, several banks met at least the minimum standards, including Fifth Third Bancorp, Huntington Bancshares, HSBC Holdings and Regions Financial Corp.