RT Journal Article
SR Electronic
T1 Servicer Performance Scoring: Using Cash Flow
to Measure Servicer Success
JF The Journal of Structured Finance
FD Institutional Investor Journals
SP 62
OP 70
DO 10.3905/jsf.2012.18.1.062
VO 18
IS 1
A1 Michael Biddle
A1 Michael Gutierrez
YR 2012
UL https://pm-research.com/content/18/1/62.abstract
AB Investors in residential mortgage-backed securities have a vested interest in the operational performance of mortgage servicers, who collect monthly mortgage payments, forward principal and interest payments, complete loss-mitigation actions, foreclose on defaulted loans, and manage the sale of real estate owned (REO) properties with real estate agents. Traditional rankings of how servicers manage their operational risk, based on analysis of their management and organization, loan administration, and default management, have not fully taken into account performance forces outside the control of the servicer. Over the course of the mortgage meltdown and the financial crisis, it became apparent that additional quantitative measures were required to evaluate servicer success based on the collection of cash and the minimization of severity upon liquidation. The authors describe a statistically based analytical method that considers all forces affecting mortgage cash flow and provide a single measure based on cash collection of how a servicer has performed against expectations and relative to its peers.TOPICS: Performance measurement, MBS and residential mortgage loans, CMBS and commercial mortgage loans