HUD
implemented the Tier Ranking System (TRS) in 2000 as a pilot to
measure servicer's utilization of HUD's loss mitigation program.
Announcement:
TRS Round 30 Release and Incentive Payment Information
The
Tier Ranking System (TRS) notification letters for Round 30 were
released via US mail to the ranked servicing lenders on December
15, 2007. The incentive payments for all lenders ranked as Tier
1 for Round 30 will begin as scheduled for claims processed on or
after January 1, 2008. All questions regarding related issues should
be directed to mailbox sfdatarequests@hud.gov.
Why
TRS?
TRS rankings are used by HUD to determine which servicers are utilizing
HUD's loss mitigation tools. Servicers in Tiers 3 and 4 (the lowest
rated tiers) are routinely targeted for training by the NSC as well
as possible investigation or audit by the Office of Lender Activities.
Additionally,
regardless of a servicer's TRS ranking, every active FHA servicer's
use of the three loss mitigation retention tools (special forbearance,
mortgage modification, and partial claim) is reviewed. HUD determines
those servicers that use one initiative exclusively at the expense
of the others. HUD also reviews servicers that use one initiative
more than 300% of the national average use or less than one-third
of the national average use. Numbers far outside the national average
may indicate servicer abuse or lack of training. Again, those servicers
whose ratios of loss mitigation use are far outside the boundaries
of normal servicers and who do not have a reason for such usage are
targeted for training, investigation, or audit.
TRS
Ranking System (TRS) Facts
|
Measures
a servicer's loss mitigation engagement alone. |
|
Can
be calculated by a servicer because the data of other servicers
is not required to make the calculation. |
|
Until
Round 20, TRS DID NOT determine increased loss mitigation incentives,
increased foreclosure reimbursement, or longer PFS time frames. |
|
Scores
are released quarterly and are based on data from a rolling 12
month rating period. |
TRS
Incentives
HUD
issued Mortgagee Letter 08-05
on February 29, 2008, announcing that FHA servicing lenders ranking
in Tier 1 during Round 30 are eligible the following:
|
An
additional $100 payment for each Special Forbearance Agreement
executed on or after January 1, 2008; |
|
Pre-foreclosure sale time frames may be extended an additional
two months without prior HUD approval; and |
|
For
loans endorsed on or after February 1, 1998, lenders will be able
to claim reimbursement of 75 percent for foreclosure costs (an
increase from the current allowance of 66 percent) on Part B claims
received by HUD on or after January 1, 2008. For loans endorsed
prior to February 1, 1998, all lenders will continue to be reimbursed
two thirds of the foreclosure costs. |
|
The
list of Tier 1 lenders for Round 30 is an attachment
to ML 08-05 . |
TRS Work
Out (WO) Ratio
The
most significant change to the TRS formula occurred effective Round
6, when it evolved into the WO Ratio. In Round 12, Accelerated Claims
Disposition (ACD) cases were added as an additional loss mitigation
factor. (Additional information about ACD can be found in HUDCLIPS.
We also have information about the changes
to the TRS parameters and benchmarks). Simply put, the work
out ratio is loss mitigation divided by loss mitigation plus foreclosures.
The actual formula is:
Forbearances + LM Retention Claims + PFSs + DILs + ACDs
|
Forbearances
+ LM Retention Claims + PFSs + DILs + ACDs + Foreclosures
|
Where
HUD gets the data
HUD
collects information on formal forbearances (FFs) through HUD's
SFDM System. Servicers who initiate forbearances and report
codes 09 (special forbearance) - but do not file an incentive claim
as when used in a combination with a mortgage modification or partial
claim - 12 (repayment), and 32 (military indulgence) during a rating
period are given credit for that forbearance. For TRS, HUD uses
the default cycle date that indicates the first time the servicer
reported the FF in an episode as the date of record.
HUD collects information on loss mitigation home retention options
through the paid claims that servicers file. The loss mitigation
home retention options are: special forbearance (SF), mortgage modification
(MM), and partial claim (PC). For credit in TRS, HUD uses the date
the claim was processed as the date of record.
HUD
collects information on terminations (PFSs, DILs, ACDs, and FCs)
through paid conveyance claims that servicers file. For TRS, HUD
uses the FHA insurance date claim was processed as the record date.
TRS Scoring
Criteria
|
A
maximum of one loss mitigation event (forbearance, special forbearance,
mortgage modification, partial claim, preforeclosure sale, deed-in-lieu,
or accelerated claims disposition) is counted for each loan per
ranking period. |
|
All
foreclosures are counted. |
|
Servicers
with less than 11 foreclosures and a ratio that puts them into
Tiers 3 or 4 are not ranked. However, servicers with less than
11 foreclosures and ratio that puts them into Tiers 1 or 2 are
ranked in their respective Tier. |
|
Tier
1 is the highest ranking (indicating best servicing performance
insofar as the application of HUD's loss mitigation is concerned) |
|
Tier 4 is the lowest ranking (indicating worst servicing performance
insofar as the application of HUD's loss mitigation is concerned) |
WO
Ratio determines Tier Ranking
A
tier ranking is assigned to servicers based on their Work Out (WO)
Ratio. The current tier benchmarks were assigned at Round 14:
Tier
|
Work
Out (WO) Ratio
|
1
|
Greater
than 0.79999
|
2
|
0.60
to 0.79999
|
3
|
0.40
to 0.59999
|
4
|
Less
than 0.40
|
Publication
of TRS Scores
At
this time, TRS scores are not public information. Servicers are
notified of their score by individual letter.
Tiering
Rounds to Date
The
following table shows the period reviewed and the dates those scores
were released. We also have electronic copies of the last four scoring
announcement letters and the latest scoring
summary.
TRS
Round
|
Ranking
Period
|
Scores
Released
|
Beginning
|
Ending
|
1
|
01/01/1999
|
12/31/1999
|
12/08/2000
|
2
|
10/01/1999
|
09/30/2000
|
01/18/2001
|
3
|
01/01/2000
|
12/31/2000
|
06/12/2001
|
4
|
04/01/2000
|
03/31/2001
|
07/30/2001
|
5
|
07/01/2000
|
06/30/2001
|
10/17/2001
|
6
|
10/01/2000
|
09/30/2001
|
08/20/2002
|
7
|
01/01/2001
|
12/31/2001
|
08/20/2002
|
8
|
04/01/2001
|
03/31/2002
|
10/21/2002
|
9
|
07/01/2001
|
06/30/2002
|
10/21/2002
|
10
|
10/01/2001
|
09/30/2002
|
01/16/2003
|
11
|
01/01/2002
|
12/31/2002
|
04/28/2003
|
12
|
04/01/2002
|
03/31/2003
|
07/21/2003
|
13
|
07/01/2002
|
06/30/2003
|
10/23/2003
|
14
|
10/01/2002
|
09/30/2003
|
02/18/2004
|
15
|
01/01/2003
|
12/31/2003
|
06/03/2004
|
16
|
04/01/2003
|
03/31/2004
|
10/27/2004
|
17
|
07/01/2003
|
06/30/2004
|
11/18/2004
|
18
|
10/01/2003
|
09/30/2004
|
02/09/2005
|
19
|
01/01/2004
|
12/31/2004
|
05/13/2005
|
20
|
04/01/2004
|
03/31/2005
|
09/30/2005
|
21
|
07/01/2004
|
06/30/2005
|
02/03/2006
|
22
|
10/01/2004
|
09/30/2005
|
02/17/2006
|
23
|
01/01/2005
|
12/31/2005
|
04/15/2006
|
24
|
04/01/2005
|
03/31/2006
|
06/10/2006
|
25
|
07/01/2005
|
06/30/2006
|
08/15/2006
|
26
|
10/01/2005
|
09/30/2006
|
12/22/2006
|
27
|
01/01/2006
|
12/31/2006
|
04/02/2007
|
28
|
04/01/2006
|
03/31/2007
|
06/01/2007
|
29
|
07/01/2006
|
06/30/2007
|
08/15/2007
|
30
|
10/01/2006
|
09/30/2007
|
12/15/2007
|
31
|
01/01/2007
|
12/31/2007
|
02/15/2008
|
32
|
04/01/2007
|
03/31/2008
|
05/15/2008
|
33
|
07/01/2007
|
06/30/2008
|
08/15/2008
|
The
following table provides a breakdown of servicers in each tier.
TRS
Round
|
Number
of Ranked Servicers in Each Tier
|
Percent
of Ranked Servicers in Each Tier
|
Tier
1
|
Tier
2
|
Tier
3
|
Tier
4
|
Total
Ranked
|
Tier
1
|
Tier
2
|
Tier
3
|
Tier
4
|
Total
Ranked
|
6
|
110
|
73
|
58
|
8
|
249
|
44.2%
|
29.3%
|
23.3%
|
3.2%
|
100%
|
7
|
123
|
71
|
49
|
6
|
249
|
49.4%
|
28.5%
|
19.7%
|
2.4%
|
100%
|
8
|
120
|
91
|
38
|
10
|
259
|
46.3%
|
35.1%
|
14.7%
|
3.9%
|
100%
|
9
|
127
|
82
|
40
|
6
|
255
|
49.8%
|
32.2%
|
15.7%
|
2.3%
|
100%
|
10
|
128
|
84
|
37
|
5
|
254
|
50.4%
|
33.1%
|
14.6%
|
2.0%
|
100%
|
11
|
113
|
89
|
34
|
3
|
239
|
47.3%
|
37.2%
|
14.2%
|
1.3%
|
100%
|
12
|
105
|
83
|
33
|
6
|
227
|
46.3%
|
36.6%
|
14.5%
|
2.6%
|
100%
|
13
|
97
|
88
|
33
|
6
|
224
|
43.3%
|
39.3%
|
14.7%
|
2.7%
|
100%
|
14
|
96
|
76
|
28
|
21
|
221
|
43.4%
|
34.3%
|
12.7%
|
9.5%
|
100%
|
15
|
98
|
77
|
26
|
21
|
222
|
44.1%
|
34.7%
|
11.7%
|
9.5%
|
100%
|
16
|
99
|
81
|
30
|
16
|
226
|
43.8%
|
35.8%
|
13.3%
|
7.1%
|
100%
|
17
|
102
|
77
|
24
|
22
|
225
|
45.3%
|
34.2%
|
10.7%
|
9.8%
|
100%
|
18
|
101
|
79
|
21
|
19
|
220
|
45.9%
|
35.9%
|
9.6%
|
8.6%
|
100%
|
19
|
104
|
72
|
25
|
16
|
217
|
47.9%
|
33.2%
|
11.5%
|
7.4%
|
100%
|
20
|
92
|
72
|
25
|
13
|
202
|
45.5%
|
35.6%
|
12.4%
|
6.4%
|
100%
|
21
|
88
|
68
|
22
|
7
|
185
|
47.6%
|
36.7%
|
11.9%
|
3.8%
|
100%
|
22
|
89
|
66
|
17
|
7
|
179
|
49.7%
|
36.9%
|
9.5%
|
3.9%
|
100%
|
23
|
95
|
60
|
20
|
3
|
178
|
53.8%
|
33.7%
|
11.2%
|
1.7%
|
100%
|
24
|
92
|
61
|
16
|
5
|
174
|
52.9%
|
35.0%
|
9.2%
|
2.9%
|
100%
|
25
|
106
|
57
|
13
|
4
|
180
|
58.9%
|
31.7%
|
7.2%
|
2.2%
|
100%
|
26
|
110
|
57
|
12
|
4
|
183
|
60.1%
|
31.2%
|
6.5%
|
2.2%
|
100%
|
27
|
110
|
54
|
8
|
4
|
176
|
62.5%
|
30.7%
|
4.5%
|
2.3%
|
100%
|
28
|
116
|
48
|
11
|
4
|
179
|
64.8%
|
26.8%
|
6.2%
|
2.2%
|
100%
|
29
|
101
|
49
|
14
|
1
|
165
|
61.2%
|
29.7%
|
8.5%
|
0.6%
|
100%
|
30
|
99
|
43
|
9
|
5
|
156
|
63.5%
|
27.5%
|
5.8%
|
3.2%
|
100%
|
31
|
89
|
39
|
11
|
5
|
144
|
61.8%
|
27.1%
|
7.6%
|
3.5%
|
100%
|
32
|
91
|
46
|
8
|
3
|
148
|
61.5%
|
31.1%
|
5.4%
|
2.0
|
100%
|
33
|
93
|
41
|
12
|
2
|
148
|
62.8%
|
27.7%
|
8.1%
|
1.4%
|
100%
|
Comments
and Questions
|