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c. Servicer Tier Ranking System II (02/16/2021)
i. Definition
The Tier Ranking System (TRS) II is a methodology for quantifying a Mortgagee’s performance in complying with HUD’s Loss Mitigation and Delinquent servicing policies.
ii. Standard
TRS II evaluates Mortgagees’ overall performance in Delinquent mortgage servicing, based on the following elements:
• foreclosure prevention: evaluates a Mortgagee’s foreclosure initiation actions, time frames, and intervention practices;
• Re-Defaults: evaluates and scores the performance of cases after a mortgage modification or Partial Claim incentive claim is filed with and processed by HUD, or after a non-incentivized modification is reported to HUD;
• SFDMS reporting: evaluates if a Mortgagee is reporting on all open Defaults and evaluates the number of fatal errors committed by the Mortgagee; and
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• loss mitigation engagement: measures the Mortgagee’s formal and informal loss mitigation engagement and indirectly measures early engagement in loss mitigation.
See TRS II – Scorecard Calculation Methodology – Servicer Narrative for complete instructions.
iii. Who Will Be Scored
(A) Eligibility
HUD scores and classifies all Mortgagees as a Public Scorer, Public Provisional Scorer or Private Scorer.
A Mortgagee must have a continual 12 months of performance or is automatically opted out for that fiscal year’s scores. In addition, a Mortgagee must meet the criteria of either Public Scorer or Public Provisional Scorer to be eligible for increased incentives.
A Mortgagee who is contemplating and/or anticipating an institution level acquisition or merger may contact HUD at answers@hud.gov to discuss scoring impacts and ramifications. For more information about transferor and transferee responsibilities during an acquisition or merger, see Responsibility for Servicing Actions.
(1) Public Scorer
A Mortgagee will be classified as a Public Scorer when the Mortgagee:
• is approved to service Single Family Mortgages;
• has an active approval status; and
• is the Servicer of record for a seriously delinquent portfolio of more than 25 Mortgages.
A Mortgagee classified as a Public Scorer has no option to opt out. The Mortgagee’s final fiscal year end score will be made available to the public and is eligible for increased incentives associated with achieving a Tier 1.
(2) Public Provisional Scorer
A Mortgagee will be classified as a Public Provisional Scorer when the Mortgagee:
• is approved to service Single Family Mortgages;
• has an active approval status; and
• is the Servicer of record for a seriously delinquent portfolio of between 5 and 25 Mortgages.
A Mortgagee classified as a Public Provisional Scorer has the option to opt out. The Mortgagee’s final fiscal year end score will be made available to the public if
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the opt-out option is not exercised and is eligible for increased incentives associated with achieving a Tier 1.
(3) Private Scorer
A Mortgagee will be classified as a Private Scorer when the Mortgagee is the Servicer of record for a seriously delinquent portfolio of less than five Mortgages.
A Mortgagee classified as a Private Scorer is automatically opted out. The Mortgagee’s final fiscal year end score will not be made available to the public and is not eligible for increased incentives associated with achieving a Tier 1.
(B) Who Receives the Score
Mortgagees are scored on specific case performance on four TRS II elements as the Servicer of record per HUD's insurance system when any of the following is triggered:
• SFDMS reporting: the Mortgagee that is the Servicer of record and is performing loss mitigation for the current default episode;
• loss mitigation engagement: the Mortgagee that executes the Loss Mitigation Option, or files the claim;
• foreclosure prevention: the Mortgagee that initiates the foreclosure; or
• Re-Defaults: the Mortgagee that executed the initial Loss Mitigation Option prior to the Re-Default.
Additional information related to this can also be found in the TRS II – Scorecard Calculation Methodology – Servicer Narrative.
(C) Process to Opt Out
The Mortgagee must determine if it qualifies to opt out. To request to opt out of scoring, the Mortgagee must submit a request to HUD via email to answers@hud.gov, no later than October 31 of each calendar year for which the Mortgagee requests to opt out of scoring. The Mortgagee must include in the request:
• “TRS II Opt Out” in the subject line of their email; and
• their Mortgagee five-digit ID number.
Once HUD verifies the Mortgagee’s status, the Mortgagee will receive a confirmation email that the Mortgagee has opted out of scoring for the fiscal year.
(D) Use of Scores
HUD will continue to score all Mortgagees. Scores for Public Provisional Mortgagees who have exercised the opt-out option and for Private Scorers will be used for informational purposes and HUD audits.
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HUD will not make publicly available the scores of Mortgagees who have opted out of scoring.
iv. Tier Ranking System II Element Calculations
Mortgagees may calculate their own TRS II scores by following the instructions provided in the TRS II – Scorecard Calculation Methodology – Servicer Narrative.
v. Extra Credit
The Mortgagee may receive extra credit added to their final fiscal year end score by attending, participating in, and/or completing delinquent servicing training pursuant to the attendance and completion requirements in the TRS II – Scorecard Calculation Methodology – Servicer Narrative.
vi. Scores, Grades, and Tiers
HUD evaluates each scoring element separately, based on activity for each month in the quarter, and then averages the elements for a quarterly score.
HUD will provide Mortgagees with a TRS II Scorecard each quarter, along with a corresponding letter grade and tier ranking. HUD will average quarterly scores to produce a final annual fiscal year score and grade.
Final Fiscal Score Assigned Grade Corresponding Tier 90.00% - 100.00+% A 1 80.00% - 89.99% B 2 70.00% - 79.99% C 3 60.00% - 69.99% D 3 59.99% or Less F 4
vii. Notification of Tier Ranking System II Scores
Mortgagees will receive notice that quarterly TRS II scores are available via email after the conclusion of each fiscal year quarter. See the TRS II – Scorecard Calculation Methodology – Servicer Narrative for information on how to receive these quarterly notices.
viii. Appeals
(A) Basis for Appeals
The only basis for an appeal by the Mortgagee receiving an “F”/Tier 4 is disagreement with the data used by HUD to calculate the Mortgagee’s grade. If HUD determines that the Mortgagee’s “F”/Tier 4 grade rating was based on incorrect or incomplete data, HUD will recalculate the Mortgagee’s performance and will provide a corrected score.
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(B) Time Frame
Mortgagees receiving a grade of “F”/Tier 4 may appeal their final score no later than 30 Days after the issue date of the final fiscal year grade.
(C) Process
The Mortgagee must submit the appeal to HUD’s Deputy Assistant Secretary for Single Family Housing or their designee and request an informal HUD conference.
ix. Public Availability of Scores and Grades
All scored Mortgagees, except those which have chosen to opt out, will have their names and scores published on HUD’s Tier Ranking System website at the close of each calendar year, after all Appeals have been evaluated and after Mortgagees that have submitted appeals have been notified of the decision.
x. Increased Incentives
A Mortgagee earning a final annual fiscal year grade of “A” and Tier 1 score may qualify for increased incentives for the following calendar year.