SMDU Offers Efficiency for Bulk Streamlined Modification Offers
By Don Geiger | March 29, 2016
One of the many efficiency-improving functionalities of Fannie Mae’s Servicing Management Default Underwriter™ (SMDU™) tool is its bulk submission feature. This functionality allows a servicer to simultaneously submit up to 3,000 cases in one file to SMDU for evaluation of a Fannie Mae Streamlined Modification versus submitting one case at a time.
SMDU’s real-time decisioning helps servicers provide faster workout decisions to homeowners who are at risk of foreclosure, while ensuring compliance with Fannie Mae workout evaluation policies through accurate and consistent workout decisioning.
“The bulk submission functionality allows us to focus our energy on finding and serving borrowers who might be eligible for streamlined modifications instead of focusing on eligibility rules, interest rate changes, and constructing loan modification terms,” says Craig Fulford, vice president of loss mitigation programs at Ditech Financial. “Any time we can exchange that core blocking and tackling for focusing on borrowers.”
Under the program, servicers mail a Fannie Mae Streamlined Modification trial period plan offer directly to eligible borrowers. Those borrowers must then make three on-time payments during their trial period, and must return a signed loan modification agreement, to receive a permanent modification.
Before many servicers began using SMDU for mass solicitations of Fannie Mae Streamlined Modifications, each loan had to cross an agent’s desk. Today, servicers can submit thousands of cases at a time, confident that subsequent streamlined modification offers to borrowers will meet Fannie Mae’s requirements.
“The real benefit for us is the ability to quickly screen our entire portfolio, identify customers who qualify, and put the simple terms in front of those customers so they know exactly what they’re getting into even before they make their first trial payment,” says Paul O’Leary, senior vice president of foreclosure prevention at Nationstar Mortgage.
“They’re all preapproved,” he adds. “Customers can quickly, simply, and easily understand the offer. As we receive the trial payments and the trials are completed, we’re able to move everything through the SMDU process from start to finish.”
SMDU’s bulk solicitation functionality has increased the productivity and efficiencies of servicers that use it.
“The increased volume has been a huge plus for us by allowing us to reach more borrowers,” says Ryan Johnson, manager of client management and strategic initiatives at Ditech Financial. “When we implemented this functionality in the summer of 2013, streamlined modifications quickly became about half of our modification outreach.”
“This functionality has enabled us to identify more customers early on and quickly put a very good comprehensive offer in front of them. It’s also created a modification process for eligible borrowers that’s simpler than the process some customers experience with a fully underwritten modification that involves multiple document submissions,” adds Nationstar’s O’Leary.
“We view it as a real win.”
Using SMDU’s bulk submission functionality creates certainty for servicers by providing accurate interpretations of Fannie Mae policies. Fannie Mae automatically updates SMDU with policy changes, enabling servicers to focus more resources on customers.
The program also offers limited liability relief to servicers when they use SMDU decisions.“We’ve had a nice efficiency gain out of this,” O’Leary says. “We have far fewer team members going through the aggregation of data than we used to. We use a simple file transmission that’s fairly low touch. The ability to get answers back quickly enables our loss mitigation team to engage with our customers almost immediately after getting results back from SMDU.”
The bulk submission functionality may ultimately allow more borrowers who face foreclosure to stay in their homes. Ditech Financial found that some borrowers who were two years delinquent on their mortgages accepted their streamlined modification offers and started modification trials after being contacted as part of the SMDU mass solicitation effort.
“This created a new opportunity for borrowers that otherwise probably believed there was no hope for them to stay in their homes and had disengaged from us,” says Martin Burd, vice president of client management and strategic initiatives at Ditech Financial.
“It gave a fresh start to those borrowers who really needed an opportunity but were probably scared to reach out and talk about it. This program gave them a good way to get their loans current, get out of the foreclosure process, and stay in their homes. The bulk functionality allows us to cast the widest net possible and offer borrowers a solution to resolve their issues.”
Don Geiger is a freelance writer based in Dallas.