Fannie Mae: SMDU: A Helping Hand for Borrowers and Servicers
September 8, 2015
The Housing Industry Forum released an article discussing the benefits of the Servicing Management Default Underwriter (SMDU).
The efficiency, certainty and simplicity that loan servicers have gained by using Servicing Management Default Underwriter™ (SMDU™) add up to an even more profound benefit–empowering servicers to give their customers who are delinquent on their mortgages timely and accurate decisions to avoid foreclosure.
“Our primary goal is to offer the borrower a helping hand,” says Ron Malik, vice president of collections and loss mitigation at Dovenmuehle Mortgage. “We want to help them find a retention solution to stay in their property or, if they’re looking at a liquidation, identify the right solution to walk away gracefully. SMDU allows us to look at all of those options at the same time so that we’re able to understand which solution best helps borrowers resolve their hardship.”
SMDU, introduced by Fannie Mae in 2011, simplifies the eligibility determination for all Fannie Mae loss mitigation programs, enabling servicers to confidently provide faster workout decisions to homeowners who are at risk of foreclosure and for whom time is of the essence.
This free tool ensures Fannie Mae’s loss mitigation policies are correctly interpreted and deployed in a way that significantly cuts cycle times, costs and uncertainty for loan servicers.
“SMDU clearly offers us the ability to work in a more efficient and accurate manner with regard to Fannie Mae’s modification eligibility requirements,” says Michael Small, director of loss mitigation at CitiMortgage. “Essentially, we replaced a very manual process that we previously used to decision Fannie Mae modifications with one that is now fully automated due to our direct integration with SMDU.”
When a borrower becomes delinquent, servicers are on the front line to help them find a solution. As loss mitigation options have become more diverse and the decisioning criteria more specific, servicers were challenged to keep up with the rapid pace of change. SMDU was developed, in part, to help servicers manage those challenges.
“Our initial focus with SMDU was to ensure that Fannie Mae loss mitigation policy was being interpreted and executed correctly and consistently from servicer to servicer and from homeowner to homeowner,” says Pat Kopins, director of product development at Fannie Mae. “Homeowners should receive the full benefit of our policy regardless of who services their loan. We wanted to provide a solution to servicers that, no matter how fast changes were happening, both borrowers and servicers received the benefit as soon as possible and with as little effort as possible.”
In addition to the risk of misinterpreting loss mitigation policies, such policy changes bring costs and other risks to servicers.
“Every change represents some level of investment for servicers,” Kopins says. “To implement a policy change, they put time, resources and energy into it. They have to understand and interpret the policy, make the necessary software changes, test the changes and then operationally deploy the new policy.”
SMDU is updated when Fannie Mae policy changes, removing that burden.
“SMDU enables servicers to focus on the process, such as submitting accurate and complete data, and creating a great customer experience,” says Kopins. “We at Fannie Mae do the heavy lifting by ensuring SMDU’s decisions are compliant with Fannie Mae workout evaluation policies. By taking work off the servicers’ plates, we free up resources that they can use to move their business forward in other areas.”
Delivering Real-Time Decisions
Fifty-six loan servicers now rely on SMDU. Some servicers access the decisioning tool directly through their own loss mitigation platform, while others access it via third-party vendors. Using data provided by servicers, SMDU evaluates a homeowner for all of Fannie Mae’s workout options and delivers a real-time eligibility determination to the servicer—and it’s available 24/7.
“Quicken Loans is a technology and client service company that is amazingly good at originating and servicing mortgages,” says Jenny Smolek, director of servicing technology at Quicken Loans. “SMDU integrates with our technology-driven servicing platform very well and allows us to quickly help our clients who may be having difficulty making their payments.”
Tracy Zobel, divisional vice president of default at Quicken Loans, adds: “With every iteration, SMDU gets stronger. The tool makes it even easier to work together with Fannie Mae to help keep at-risk clients in their homes.”
For CitiMortgage, transitioning from manual processes to the seamless automation of SMDU has helped provide clarity to borrowers about their loss mitigation options.
“SMDU benefits the borrower by providing a more timely decision and minimizing the opportunity for errors,” Small says.