FHFA AB 2014-07 Oversight of Single-Family Seller/Servicer Relationships
On December 1, the Federal Housing Finance Agency (FHFA) released Advisory Bulletin AB 2014-07, titled Oversight Of Single-Family Seller/Servicer Relationships.
FEDERAL HOUSING FINANCE AGENCY
OVERSIGHT OF SINGLE-FAMILY SELLER/SERVICER
This advisory bulletin communicates the Federal Housing Finance Agency’s (FHFA) supervisory expectation that Fannie Mae and Freddie Mac (collectively, the Enterprises) maintain the safety and soundness of their operations by effectively managing counterparty risks. FHFA expects each Enterprise to assess financial, operational, legal, compliance, and reputation risks associated with its single-family Seller/Servicer counterparties and to take appropriate action to mitigate those risks or reduce the Enterprise’s exposure. Toward this end, each Enterprise should implement a board-approved risk management framework that specifically includes risk-based oversight of single-family Seller/Servicers. Enterprise oversight should be performed pursuant to policies and procedures as described in this advisory bulletin.
The business relationships between the Enterprises and Seller/Servicers are a fundamental component of the Enterprises’ delegated business models. Seller/Servicers engage in business transactions with and on behalf of the Enterprises, principally selling loans and performing servicing functions, under the terms of each Enterprise’s respective selling and servicing guide and other contractual provisions. The term “Seller/Servicer” as used in this advisory bulletin includes all entities that sell single-family mortgage loans to the Enterprises or perform single-family mortgage loan servicing for the Enterprises.
Seller/Servicers may engage in all aspects of a mortgage loan’s lifecycle or specialize in phases of the lifecycle (e.g., servicing delinquent mortgage loans). Individual Seller/Servicers may present unique risks due to their organizational structure and complexity; operational and technological AB 2014-07 (December 1, 2014) Public capabilities and capacity; experience; access to financial resources, both funding and capital; and
scope of regulatory oversight.
Please click here to view the bulletin in its entirety.
Safeguard Properties is the largest mortgage field services company in the U.S. Founded in 1990 by Robert Klein and based in Valley View, Ohio, the company inspects and maintains defaulted and foreclosed properties for mortgage servicers, lenders, and other financial institutions. Safeguard employs approximately 1,700 people, in addition to a network of thousands of contractors nationally.