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Discussion Paper: Alternative Mortgage Servicing Compensation

Published: 9/27/2011

The purpose of this Discussion Paper is to propose and seek comments on two new mortgage servicing compensation structures. On January 18, 2011, FHFA announced a Joint Initiative to consider alternatives for a new mortgage servicing compensation structure. FHFA directed Fannie Mae and Freddie Mac, in coordination with FHFA and the Department of Housing and Urban Development (HUD), to consider alternatives for future mortgage servicing structures and servicing compensation for single-family loans. The Joint Initiative’s primary goals were:

  • Improve service for borrowers;

  • Reduce financial risk to servicers; and

  • Provide flexibility for guarantors to better manage non-performing loans, while promoting continued liquidity in the To Be Announced (TBA) mortgage securities market.

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