Having spent most of my career entrenched in the Single-Family line of business at both GSEs, I’ve witnessed the depth and breadth of these two entities’ integration into the U.S. residential mortgage ecosystem. As part of the team in Credit Risk Transfer (CRT) at Freddie Mac that’s raised more than $105 billion of private capital to absorb credit losses, I worked to demonstrate to investors our commitment to sound underwriting and loss mitigation practices. It’s through this lens of promoting affordable, sustainable homeownership by driving down credit losses and managing risk that I approach my new role as Head of Servicing.

Analytics, Technology and a Proactive Mindset Improve Outcomes.

In both CRT and servicing, data and analytics are significant drivers. Given our large book of business, we need to invest in improving our technology and integrating with our Servicers. Though capital market deals occur on a transaction-by-transaction basis, the key to success is viewing their influence on the broader market. Servicing is similar in that we must pursue optimal results at the loan level, while concurrently remaining mindful of their cumulative impact to Servicers, borrowers and the entire industry.

Paramount to success is providing Servicers with the necessary technology and resources to effectively manage their business—including transparency on decisions and availability of data. The more data we have at our disposal, the better the borrower outcomes. We’ve made tremendous progress and continue to push forward the goal of improving our system-to-system connectivity and procuring accurate, real-time data. We’ve been committed to innovation as it relates to key data by all parties in the servicing lifecycle, and we continue to work with the industry to face the ongoing challenge of innovating and transforming the servicing ecosystem.

Over the past few years, we’ve also made significant investments in technology like Resolve®, our default management solution. It’s crucial to continue to build our infrastructure to support the borrower and minimize losses. We’re currently in a benign environment, with strong employment, an extremely low Seriously Delinquent Loan (SDQ) rate and the most impactful effects of the COVID-19 pandemic behind us—but who knows what next month or next year could bring?

Freddie Mac is concerned about mitigating losses in any market, but we’re especially watchful for those that could emerge in the next stress environment. We’re making investments along with our Servicers to be better prepared for whatever the next crisis may be. During normal and stress periods, Freddie Mac has a commitment to offer all distressed homeowners an opportunity to stay in their homes. We can accomplish this while simultaneously driving our credit costs lower, which in turn allows us to make home ownership more affordable for future borrowers.

Compared to the emphasis on executing foreclosures swiftly and efficiently that we saw during and after the 2007-2008 financial crisis, today’s servicing activities are firmly centered on home retention. We’ve massively altered our waterfall, offering various loss mitigation options, including payment deferrals and Flex Modifications®, to give distressed borrowers the opportunity to make reasonable payments and remain in their homes. It’s critical to continue that collaborative technology journey with Servicers and focus on preventing early-stage delinquencies, which is at the heart of our mission of promoting sustainable homeownership.

Tailored Servicer Relationships Mitigate Risk and Improve Borrower Satisfaction.

Over the past fifteen years, the servicing landscape has shifted significantly. Back then, around two-thirds of the loans in our servicing portfolio were managed by depository institutions; today, that statistic has flipped, with our portfolio dominated by non-banks. This creates differing risks for Freddie Mac and Servicers. We need to continue to share with leaders of all types of financial institutions the cost-saving, risk and efficiency benefits associated with servicing Freddie Mac loans.

Another opportunity for a mutual win is facilitating the process to match Servicers with their preferred mortgage category. We work with around 1,300 Servicers; some excel at servicing delinquent loans, while others prefer to stay in the performing loans space. Allowing the latter to opt out of dealing with a larger number of non-performing loans, while permitting Servicers who are savvy at loss mitigation to help their customers stay in their homes or gracefully exit, streamlines business and improves the borrower experience.

Related to efficiency is the goal of reducing the friction that results from servicing transfers. In 2023, the industry experienced a shift with many servicers exiting the business. With such a large amount of turnover comes a need for reducing pain points, both from a business-to-business perspective and a consumer one. A borrower may not have control over when their mortgage gets transferred or to whom, but what we can do to remove any friction that exists?

Leveraging Our Innovative Team and Refining Our Goals Will Continue to Move the Needle.

As Head of Servicing, I’m ultimately responsible for all outcomes in the servicing realm. As a leader, I value business expertise, accountability, strong and resilient processes, delegation and a clear understanding of responsibilities. Successful leaders are only as successful as their teams. Fortunately, the servicing team at Freddie Mac is very strong, and our technology continues to improve. For example, though COVID-19 posed a significant risk that could have snowballed into massive losses, Freddie Mac responded by rolling out relevant loss mitigation solutions to help borrowers during this unprecedented crisis—a testament to the strength of our servicing team, whose members are well-seasoned in their areas of expertise.

As someone coming into this role from a different line of business, I’m afforded the chance to be curious, question the process and evaluate our current operations to ensure they’re aligned with our approach. I’m excited to leverage my industry experience to encourage seamless coordination and collaboration with our internal and external stakeholders and make incremental improvements on our existing platforms. Above all, I’m inspired and energized to make—and keep—home possible.