Reference Guide. 2015, Version 5.1. 2015 Fannie Mae. 2015 Fannie Mae STAR Reference Guide Page 1 of 111

Reference Guide 2015, Version 5.1 2015 Fannie Mae 2015 Fannie Mae STAR Reference Guide Page 1 of 111

1. Disclosures... 4 2. Preface... 5 2.1 Introduction... 5 2.2 Program Rationale and Benefits... 7 2.3 Intended Audience... 8 2.4 Document Organization and Structure... 9 3. Servicer Total Achievement and Rewards (STAR) Program... 10 3.1 Program Overview... 10 3.2 Servicer Inclusion Criteria... 11 3.3 STAR Designations and Criteria... 13 3.4 Program Administration... 14 4. STAR Performance Scorecard... 15 4.1 Scorecard Overview... 15 4.1.1 Metrics Overview... 16 5. Servicer Capability Model (SCM) Framework and Methodology... 18 5.1 SCM Framework Introduction... 18 5.2 Business Architecture... 19 5.3 SCM Framework Introduction... 20 5.4 Operational Assessment Overview... 23 5.5 Operational Assessment Process... 24 6. SCM Organizational Overview and Shared Processes... 27 6.1.1 Organizational Overview... 28 6.1.2 Project Management... 29 6.1.2.1 Standardized Practices... 30 6.1.2.2 Project Documentation... 32 6.1.3 Business Process Management... 34 6.1.3.1 Standardized Practices... 35 6.1.3.2 Key Process Documentation... 37 6.1.4 Internal Controls... 39 6.1.4.1 Internal Controls Framework... 39 6.1.4.2 Exceptions Management... 40 6.1.5 People Management... 42 2015 Fannie Mae STAR Reference Guide Page 2 of 111

6.1.5.1 Incentives Framework... 42 6.1.5.2 Workforce Development Overview... 43 6.1.5.3 Training Effectiveness... 44 7. SCM Business Processes... 45 7.1 General Servicing... 45 7.1.1 Investor Reporting and Accounting... 49 7.1.2 Loan Administration... 52 7.1.3 Customer Service... 59 7.1.4 Investor Relationship Management... 65 7.1.5 Vendor Management... 69 7.2 Collections and Loss Mitigation... 73 7.2.1 Collections... 77 7.2.2 Loss Mitigation... 84 7.3 Default Management... 92 7.3.1 Bankruptcy... 96 7.3.2 Foreclosure...105 7.3.3 Property Preservation and Post Foreclosure Management...109 2015 Fannie Mae STAR Reference Guide Page 3 of 111

1.0 Disclosures 1. Disclosures STAR Reference Guide Purpose The Fannie Mae Servicer Total Achievement and Rewards (STAR ) Program was created to provide consistent and specific expectations aligned to Fannie Mae s business objectives and a framework for measuring servicer performance relative to those expectations. This Servicer Total Achievement and Rewards (STAR) Reference Guide ( STAR Reference Guide or Reference Guide ) serves as implementation guidance for servicers. Conflict with Fannie Mae s Servicing Guide or Contracts Servicers are responsible for complying with the Servicing Guide and applicable contracts, such as the Mortgage Selling and Servicing Contract (MSSC). In the event of any conflict between the Servicing Guide or any applicable contract and the terms of the STAR Reference Guide, the terms of the Servicing Guide or applicable contract shall control. Program Updates The content of version 5.1 of the STAR Reference Guide governs the STAR Program for the 2015 STAR Program year. Fannie Mae may at any time update, rescind or amend any and all materials in the STAR Reference Guide. Fannie Mae will notify servicers of changes and updates to the STAR Reference Guide by email. Fannie Mae posts an electronic version of this Reference Guide on www.fanniemae.com and makes every effort to keep it updated with changes throughout the year. The servicer should ensure its leadership team, operation managers, and staff, as applicable, are familiar with the content. Fannie Mae Use of Data Fannie Mae takes appropriate measures to safeguard servicer-provided data. Further, servicer-provided data will not be attributed to a particular servicer without prior permission from the servicer. Publication The documentation used for servicer reviews and operational assessments is considered to be confidential information for purposes of the Servicing Guide; however, STAR designations and the results Fannie Mae generates based on the servicer s scorecard, servicer reviews and operational assessments may be made public. When Questions Arise The STAR Reference Guide explains STAR Program parameters, details the Shared and Business Processes included in the operational assessment and provides recommendations for success. If servicers have questions or feedback related to any section of the Reference Guide, they should contact their Portfolio Manager or may provide feedback directly to STAR_mailbox@fanniemae.com. 2015 Fannie Mae STAR Reference Guide Page 4 of 111

2.1 Preface > Introduction 2. Preface 2.1 Introduction The efforts of our mortgage servicers are critical to keeping people in their homes, preventing foreclosures and providing homeowner assistance. To the extent that mortgage servicers are hampered by limited resources or other factors, they may be unable to conduct their servicing activities in a manner that fully accomplishes objectives within a desirable timeframe. The STAR Program supports the industry by establishing a transparent and formal framework to recognize our servicing partners for their competency, capacity and overall performance. This performance management framework supports a comparative program designed to gauge relative performance. A key objective of the Program is to motivate servicers beyond contractually obligated requirements by providing benchmarks that drive servicers to continually strive toward greatness resulting in eligibility for higher incentive payments and peer recognition. There are certain elements that are shared across great organizations. Such organizations are customerdriven, and actively view their services and processes from the perspective of their customers. They focus on effective leadership and clear communication; the tone at the top sets the direction and culture for the entire organization. Great organizations have performance measurement and management systems in place, designed with a balanced set of measures that are well understood by all levels of the company. Fannie Mae has selected a targeted set of financial, performance and capability measures that are important in assessing the overall efficiency and effectiveness of our servicers. The STAR Performance Scorecard consists of a balanced set of those measures, focused on credit performance and outcomes. There is a strong correlation between operational effectiveness, customer satisfaction and financial outcomes. The Servicer Capability Model (SCM) supports our servicing partners by providing a framework that aligns our servicers capabilities with Fannie Mae s objectives. This framework establishes a single and consistent reference point with which to evaluate and measure individual servicer operations across people, processes and technology. 2015 Fannie Mae STAR Reference Guide Page 5 of 111

2.1 Preface > Introduction The STAR Program provides consistent, specific, and measurable expectations aligned with Fannie Mae s business objectives. Focusing on critical success factors and associated measurements helps prioritize servicer efforts and identify the key linkages between operational areas and business results. 2015 Fannie Mae STAR Reference Guide Page 6 of 111

2.2 Preface > Program Rationale and Benefits 2.2 Program Rationale and Benefits The Servicer Total Achievement and Rewards Program was created to facilitate broad and lasting improvements across the industry. Fannie Mae s commitment to homeownership, the mortgage industry, continuous improvement, and customer satisfaction are strengthened in cooperation with our servicing partners. Align servicer performance with Fannie Mae goals Formally communicating credit, performance and operational goals by establishing transparent measures will ensure Fannie Mae s objectives and servicers individual performances are tightly linked. Enhance the operational effectiveness of servicers Through the use of its assessment framework, the STAR Program will help identify leading practices and operational gaps. A marked focus on key operational capabilities can help servicers realize competitive market gains. Improve borrower experience By measuring the effectiveness of servicers interactions with borrowers, including the counseling that servicers offer, and implementing improvement roadmaps, servicers will enhance the overall borrower experience. Promote servicing knowledge and excellence across housing industry and drive change By establishing and publishing an open Business Process Architecture Model, the STAR Program will serve as a basis for sharing leading practices and key measures for the industry. In addition, servicers will have access to peer benchmark data to support their own measurement programs. Restore public trust in mortgage servicers The reputation of mortgage servicers has been severely tested throughout the mortgage crisis. Many have asserted that servicers capacity, capabilities, borrower engagement and control frameworks have fallen short. A critical element of the STAR Program is to provide recognition to servicers for what they do well. Further, through the STAR Program, Fannie Mae intends to identify and encourage adoption of leading practices for the betterment of the industry, thereby restoring the public s confidence in mortgage servicers. Increase focus on actions that reduce credit losses Managing credit loss is in the interest of all constituents. The STAR Program is a comprehensive performance management tool designed to increase focus and motivate servicers beyond contractual requirements to substantially improve outcomes for Fannie Mae, the servicer and the borrower. 2015 Fannie Mae STAR Reference Guide Page 7 of 111

2.3 Preface > Intended Audience 2.3 Intended Audience This Reference Guide and subject matter are relevant for a broad range of servicing, industry, market, regulatory and government stakeholders with an interest in organizational and performance improvements. Mortgage Servicing Organizations Operations Managers - The primary audience of the STAR Reference Guide is management within Fannie Mae s servicing partners. The Reference Guide is designed to assist them in understanding Fannie Mae s expectations, improving their operations to consistently meet and exceed those expectations, and sharing the resulting successes. Managers across the various functional areas with responsibility for the designated business processes will be able to use the framework outlined in the Reference Guide to measure and improve their operations. Servicing Executives - Executives will benefit from understanding the Performance Scorecard approach that emphasizes Key Performance Indicators (KPIs). It enables executives to quickly gauge the effectiveness of key functions and processes. Analysts - The Servicer Capability Model (SCM) described in the Reference Guide may be leveraged by servicing analysts charged with optimizing the servicer s platform, conducting operational assessments or quality control, and servicer evaluations. The relationship between KPIs and operational drivers will help analysts monitor trends and target opportunities for improvement. External Organizations The STAR Program augments existing evaluations of servicer performance by other rating and benchmarking entities. The STAR Program provides a balanced approach for assessments and decision making concerning their servicing partner relationships. 2015 Fannie Mae STAR Reference Guide Page 8 of 111

2.4 Preface > Document Organization and Structure 2.4 Document Organization and Structure The STAR Reference Guide is structured into three major sections: the Servicer Total Achievement and Rewards (STAR) Program Overview, the Performance Scorecard, and the Servicer Capability Model. Chapter 3: Servicer Total Achievement and Rewards (STAR) Program Provides an overview of how servicers are recognized for their achievement. Servicer inclusion, STAR Program structure, and Program Administration are explained. Chapter Color Guide: Chapter 4: STAR Performance Scorecard Outlines the components of the STAR Performance Scorecard, including credit, performance, and operational capability scores. The Performance Scorecard provides monthly and year-to-date performance results. This Chapter provides a summary of metrics, definitions and weights. Chapter 5: Servicer Capability Model (SCM) Framework and Methodology Explains the operational assessment architecture, methodology and ratings. A business architectural approach is used to align objectives with processes, critical success factors, and key indicators. Chapter 6: SCM Organizational Overview and Shared Processes Describes the organizational overview and shared processes used in the assessment of the Business Processes. Chapter 7: SCM Business Processes *Pages of each chapter feature a unique color tab for easy reference Describes servicing business processes, including General Servicing, Collections, Loss Mitigation, and Default Management. For each process, establishes required data collection, evidence and evaluation guidelines. Additional Business Processes may be scoped into future releases. 2015 Fannie Mae STAR Reference Guide Page 9 of 111

3.1 Servicer Total Achievement and Rewards (STAR) Program > Program Overview 3. Servicer Total Achievement and Rewards (STAR) Program 3.1 Program Overview The STAR Program is a performance management system and incentive framework. Servicers will receive STAR designations and top-rated servicers will be eligible to receive incentive awards and recognition. The Program is based on three integrated components: Servicer Profile, Performance Scorecard, and the Servicer Capability Model. The Servicer Profile allows for servicers to be classified into peer groups based on portfolio composition and size. Measures will be standardized to ensure transparency and simplicity. Servicers will be provided with a confidential scorecard and ranking reports monthly. A structured operational assessment will be completed for all servicers under the Program. 2015 Fannie Mae STAR Reference Guide Page 10 of 111

3.2 Servicer Total Achievement and Rewards (STAR) Program > Servicer Inclusion Criteria 3.2 Servicer Inclusion Criteria Peer Groups have been established based on Fannie Mae servicing volume, with some adjustments for existing Total Delinquent (TDQ) and Seriously Delinquent (SDQ) volume and expected Credit Losses. Servicers participating in the STAR Program are classified into the following three groups: Peer Group 1: Servicers having greater than 500,000 Fannie Mae loans or at least 20,000 seriously delinquent loans. Peer Group 2: Servicers not in Group 1 AND servicing greater than 35,000 Fannie Mae loans and at least 600 seriously delinquent loans. Peer Group Operational Assessment Only (OA Only): Servicers not included in Peer Groups 1 or 2 with a portfolio volume of at least 35,000 loans or greater than 300 seriously delinquent loans. Subservicers that maintain a Fannie Mae portfolio large enough to be included in Peer Groups 1 or 2 and other servicers may be included at Fannie Mae s discretion. *Performance Scorecard Only Participant Peer Group 1 Peer Group 2 Wells Fargo & Company JPMorgan Chase & Co. Bank of America, N.A. Green Tree Services Group, LLC CitiGroup, Inc. Fortress Investment Group, LLC (Nationstar) Ocwen Financial Corp. Seterus PHH Corporation Quicken Loans, Inc. PNC Financial Services Group, Inc. Everbank Financial Corporation U.S. Bancorp Regions Financial Corp. Royal Bank of Scotland Group, PLC Fifth Third Bancorp HSBC Holdings PLC* The Huntington Bancshares, Inc. Central Mortgage Company Santander N.A. 2015 Fannie Mae STAR Reference Guide Page 11 of 111

3.2 Servicer Total Achievement and Rewards (STAR) Program > Servicer Inclusion Criteria SunTrust Bank, Inc. PennyMac Corp. RoundPoint Financial Group, Inc. Flagstar Bancorp, Inc. Associated Bancorp Popular, Inc. Freedom Mortgage Corporation M&T Bank Corporation Nationwide Mutual Group Saul Center, Inc. (Capital One) BB&T Corporation Peer Group OA Only Third Federal Savings and Loan Navy Federal Credit Union Cenlar Capital Corporation Dovenmuehle Mortgage, Inc. Fidelity National Financial, Inc. (Loan Care) Caliber Home Loan, Inc. Colonial Savings, F.A. Trustmark Corporation New York Community Bancorp, Inc. Provident Funding Associates, L.P. Peer groups were established based on October 2014 portfolio data With the exception of Fannie Mae owned Mortgage Servicing Rights (MSRs), when a master servicer engages a subservicer, performance numbers will be rolled up to the master servicer levels, as the master servicer maintains the overall responsibility for managing the loans and the subservicer. The master servicer will not be included in the Servicer Capability Model (SCM) Operational Assessment, only a STAR monthly scorecard will be provided. For the Fannie Mae owned MSRs, the portfolio will roll up into the entity performing the subservicing. 2015 Fannie Mae STAR Reference Guide Page 12 of 111

3.3 Servicer Total Achievement and Rewards (STAR) Program > STAR Designations and Criteria 3.3 STAR Designations and Criteria The STAR Program is based on a continuous improvement model designed to consistently raise the bar. The Program uses a 5-star model, where a 5-star ranking signifies the highest level of achievement and servicer demonstration of consistent advances toward achieving Fannie Mae business objectives. Category Requirements Capability Score No Red rating for any Process Area. Top performing servicer(s) for overall operational assessment rating No Red rating for any Process Area. Overall operational assessment rating of Green Performance Score Within the top quartile for all STAR Performance Scorecard servicers based on rank Within the top two quartiles for all STAR Performance Scorecard servicers based on rank Overall operational assessment rating of Green Within the top three quartiles for all STAR Performance Scorecard servicers based on rank No Rating Did not receive an overall operational assessment rating of Green Within the bottom quartile for all STAR Performance Scorecard servicers based on rank STAR Designations Key Points The highest level of awards and recognition will be reserved for those servicers that achieve 5 stars. Awards or recognition may be given to select performers that meet specific performance criteria and demonstrate excellence in key areas of the program. 2015 Fannie Mae STAR Reference Guide Page 13 of 111

3.4 Servicer Total Achievement and Rewards (STAR) Program > Program Administration 3.4 Program Administration The STAR Program Office is the administrator of the overall Program. Fannie Mae s Portfolio Managers and Servicing Management will partner with servicers to ensure adherence to all Program requirements. Fannie Mae s STAR Program Office is responsible for planning, directing, and coordinating various activities related to the Program, including: Establishing business rules that govern the Program Governance and Change Management Issues Management Program communication and coordination The STAR Program Office is supported by various functions within Fannie Mae: The Portfolio Management team at Fannie Mae is responsible for individual servicer accounts and is the initial point of contact for servicing staff. The central repository for STAR materials is www.fanniemae.com. The Reference Guide, Performance Scorecard White Papers, FAQs and training modules are available on the website. General Program inquiries may be directed to STAR_mailbox@fanniemae.com. Fannie Mae welcomes recommendations and input from servicers to improve the program and the underlying methodologies. Email recommendations to STAR_mailbox@fanniemae.com. 2015 Fannie Mae STAR Reference Guide Page 14 of 111

4.1 STAR Performance Scorecard > Scorecard Overview 4. STAR Performance Scorecard 4.1 Scorecard Overview The STAR Performance Scorecard is designed to help our servicers quickly identify opportunities for improvement. The Credit Performance Scorecard compares a servicer s default management performance relative to other servicers, and the Servicer Capability Model performance metrics measure performance based on set thresholds or relative to other servicers. Overall, the Credit Performance Scorecard and Servicer Capability Model performance metrics monitor servicers progress and trends against key indicators selected to reflect Fannie Mae s current business objectives. These objectives are weighted by their current strategic importance to Fannie Mae. Fannie Mae provides servicers performance feedback on their progress against each metric and relative ranking within their Peer Group via the STAR Performance Scorecard. The STAR Performance Scorecard measures servicer performance in two capacities: Credit Performance Scorecard Peer Group 1 and 2 servicers are measured on the basis of their performance in 7 non-performing loan metrics related to the following categories: Roll Rates (2 metrics), Solution Delivery (2 metrics), Workout Effectiveness (1 metric), and Timeline Management (2 metrics). Each servicer s performance in those metrics is then compared against the performance of a similar portfolio created from the Fannie Mae book of business. Servicer Capability Model Performance Metrics All STAR servicers are evaluated based on their performance relating to Servicer Capability Model performance metrics. Performance metrics are tied to Process Areas, if applicable, and are measured based on set thresholds and/or peer comparisons. The Servicer Capability Model metric Dashboard provides servicers with visibility into monthly and year-to-date performance. Scorecard metrics were selected based on Fannie Mae s current strategic objectives to minimize credit losses, accelerate the housing recovery, increase operational efficiency and improve the borrower experience. As conditions change, the STAR Program will update and communicate revisions to these key performance indicators. For each metric, weights have been assigned to emphasize the importance of the metric as it relates to Fannie Mae s current strategic objectives. 2015 Fannie Mae STAR Reference Guide Page 15 of 111

4.1 STAR Performance Scorecard > Scorecard Overview 4.1.1 Metrics Overview Performance measures gauge servicer effectiveness at managing credit performance through roll rates, solution delivery, workout performance and timeline management. Background The metrics below will not be weighted equally when calculating the servicer s overall score, but rather will be weighted based on their relative impact on credit loss reduction. This section describes how Fannie Mae determined the weights for each Credit Performance Scorecard metric. Summary of Weighting Methodology Following is a description of the process by which metric weights were calculated for the Credit Performance Scorecard: 1) Fannie Mae's modeling and analytics group calculated a loan level loss forecast for the entire portfolio using Fannie Mae's proprietary loss forecast model. The probability of default and the loss estimate for a loan are based on many characteristics, including those captured at origination and those that are updated over time, such as mark-to-market Loan to Value (LTV). 2) To isolate the servicer's impact on the loan's default probability and loss estimate, the analytics and forecasting teams compared each loan's current loss forecast against the average loss forecast of all similar loans in the portfolio. For example, let s assume that loan A and loan B have similar criteria at origination but different payment histories. Whereas loan A is presently delinquent, loan B has missed a few prior payments but is now current. (As the two loans are similar, the change in loss estimate will be attributed to the impact of the servicers when aggregated across the portfolio). The loss estimate for loan A is now $20,000, while the loss estimate for loan B is $10,000. The average loss estimate is thus $15,000, and loan A's estimate in comparison to the average is $5,000, while loan B's estimate in comparison to the average is ($5,000). (Stronger servicers will have smaller loss forecasts than the average.) 3) The modeling and analytics group used regression analysis to assess the predictive value of each metric on the forecasted credit losses. For example, the transition to 60+ metric received the highest weight; therefore, a servicer's ability to perform well in this particular metric has the greatest impact on performance and credit loss reduction. 4) Final weights were adjusted slightly for a) rounding, b) known model bias, or c) emphasis or alignment with Fannie Mae business objectives. These weights are shown in Table 1. 2015 Fannie Mae STAR Reference Guide Page 16 of 111

4.1 STAR Performance Scorecard > Scorecard Overview 2014 STAR Performance Scorecard Metrics: Description Metric Weight Roll Rates Transition to 60+ 25.0% 60+ to Cure 15.0% Solution Delivery Retention Efficiency 12.5% Liquidation Efficiency 10.0% Workout Effectiveness 12 Month Mod Performance 5.0% Timeline Management Loans Beyond Foreclosure Timeline 17.5% Beyond Time Frame Resolution 15.0% The STAR Performance Scorecard White Paper provides additional context for servicers as they evaluate their specific results as represented in the Scorecard. The STAR Performance Scorecard White Paper examines the following topics: STAR Introduction Credit Performance Metric Definitions Metric Weighting Methodology Comparable Pool Construct Methodology Scoring Framework Resources The STAR Performance Scorecard White Paper is available at www.fanniemae.com 2015 Fannie Mae STAR Reference Guide Page 17 of 111

5.1 Servicer Capability Model Framework and Methodology > SCM Framework Introduction 5. Servicer Capability Model (SCM) Framework and Methodology 5.1 SCM Framework Introduction The SCM is the detailed framework by which Fannie Mae will evaluate individual servicer capabilities across standard dimensions of people, processes and technology. The SCM provides clear and actionable direction to servicers based on data that allows for root cause analyses. Define: The SCM describes a Business Architecture, or a logical blueprint, for defining and controlling business objectives. Measure: Critical Success Factors from the SCM identify key focus areas where the servicer must perform effectively, using generally accepted metrics. Analyze: Using data collected, trending, comparative, and regression analyses can help to provide insight into operations and performance drivers. Improve: Servicer and Servicing Management defined action plans to address performance gaps and opportunities. Source: Six Sigma D-M-A-I-C methodology Control: Framework will be applied across all servicers and provide a quick means to understand the inputs and outcomes across servicing activities. 2015 Fannie Mae STAR Reference Guide Page 18 of 111

5.2 Servicer Capability Model Framework and Methodology > Business Architecture 5.2 Business Architecture The business architecture is a logical blueprint for defining and controlling the integration of business process, systems and their components. Each Process Area within the STAR Reference Guide provides a summary of the Business Process, Critical Success Factors, Assessment Areas, Required Information and Evaluation Criteria and Recommendations. The Business Process chapters are structured hierarchically to describe each Process, and state Fannie Mae s expectations. The STAR Program uses the business architecture to reflect servicing operations. This business architecture: Defines how business objectives, processes, and key performance indicators relate. Supports a top-down approach and a common and consistent framework for viewing and analyzing servicer capabilities across the key dimensions of people, processes and technology. All Process Areas and associated Critical Success Factors and metrics described in the STAR Reference Guide follow the numbering scheme outlined in the figure below. SCM Business Architecture 2015 Fannie Mae STAR Reference Guide Page 19 of 111

5.3 Servicer Capability Model Framework and Methodology > SCM Framework Introduction 5.3 SCM Framework Introduction Operational measures are focused on gauging the effectiveness of the servicer s capabilities in key areas of interest to Fannie Mae. Performance is based on design and execution of underlying organizational processes. Well-designed business processes typically increase effectiveness and efficiency in meeting core objectives. ORGANIZATIONAL OVERVIEW AND SHARED PROCESSES Shared Processes are defined as processes that serve the entire enterprise and support efficient and effective functioning of key business processes. Typically, enterprise Shared Processes include Human Resource Management, Information Technology, Compliance/Audit and Business Process Management. Support Shared Processes typically include Project and Portfolio Management, Quality Assurance, Quality Control and Business Performance Analytics. The Shared Processes currently in scope for the STAR Program are Project Management, Business Process Management, Internal Controls, and People Management. Shared Processes do not receive a stoplight rating (i.e., red, yellow or green) instead the information will be used to provide context to the Business Process Area evaluations. 2015 Fannie Mae STAR Reference Guide Page 20 of 111

5.3 Servicer Capability Model Framework and Methodology > SCM Framework Introduction BUSINESS PROCESSES Business Processes are the primary functions servicers perform to achieve their business objectives. Examples include customer support, cash management, and loss mitigation. The STAR Program scope will consider General Servicing, Collections and Loss Mitigation, and Default Management Process Area Critical Success Factor Assessment Area 7.1.1 Investor Reporting and Accounting 7.1.2 Loan Administration 7.1.3 Customer Service 7.1.4 Investor Relationship Management 7.1.5 Vendor Management 7.1.1.1 Investor Reporting and Custodial Reconciliation 7.1.2.1 Escrow Administration 7.1.2.2 Loan On and Off Boarding 7.1.3.1 Call Center Operations 7.1.3.2 Call Center Demand-Capacity Management and Balancing 7.1.3.3 Customer Satisfaction 7.1.3.4 Escalations 7.1.4.1 Partnership and Cooperation 7.1.4.2 Review Finding Results and Remediation 7.1.4.3 Fannie Mae Data Requests 7.1.5.1 Vendor Selection 7.1.5.2 Vendor Management and Oversight Fannie Mae Cash Reporting and reconciliation Fannie Mae delinquency status reporting Escrow analysis Escrow management Escrow disbursements Communication On boarding Off boarding Call center reporting Call monitoring Call volume and workforce management Customer satisfaction surveys Written Communication Escalations management Engagement and participation in new initiatives and products Compensatory fees, penalties and indemnification payment management Completeness, timeliness and resolution of review findings and action plans Timeliness, completeness and accuracy of servicer provided data Process for selecting vendors Management and oversight of vendors Vendor communication 2015 Fannie Mae STAR Reference Guide Page 21 of 111

5.3 Servicer Capability Model Framework and Methodology > SCM Framework Introduction Process Area Critical Success Factor Assessment Area 7.2.1 Collections 7.2.2 Loss Mitigation 7.3.1 Bankruptcy 7.3.2 Foreclosure 7.3.3 Property Preservation and Post Foreclosure Management 7.2.1.1 Borrower Outreach 7.2.1.2 Workforce Management 7.2.1.3 Call Handling and Reporting 7.2.1.4 Borrower Assessment and Counseling 7.2.2.1 Single Point of Contact and Workforce Management 7.2.2.2 Borrower Solicitation 7.2.2.3 Counseling and Decisioning Tools 7.3.1.1 Case Initiation 7.3.1.2 Timeline Management and Reporting 7.3.1.3 Process Management 7.3.2.1 Foreclosure Initiation 7.3.2.2 Timeline Management and Reporting 7.3.2.3 Process Management 7.3.3.1 Preserving, Protecting and Maintaining Fannie Mae Collateral 7.3.3.2 Post Foreclosure Review 7.3.3.3 Title Exceptions Campaign prioritization Effective campaign strategies Staffing Model Employee incentive plans Demand capacity management and balancing Call monitoring Call center reporting Counseling and decisioning tools Counseling agencies Pipeline monitoring and exception management Ownership model Workforce management Solicitation of retention and liquidation solutions Retention counseling and decisioning tools Liquidation counseling and decisioning tools Pipeline monitoring and exception management Bankruptcy case opening and servicer system update Proof of Claim filing and case review Managing key bankruptcy milestones and timelines Adherence to Fannie Mae bankruptcy referral guidelines Foreclosure prevention opportunities Adherence to payment plans or other arrangements Managing post-discharged Chapter 7 loans Pre-referral to foreclosure review on loans determined eligible for foreclosure Timeliness, completeness and accuracy of referral package Adherence to Fannie Mae foreclosure timelines and reporting requirements Monitoring attorney performance Pre-foreclosure sale management and oversight Attorney Management Properly maintain property condition through inspection, preservation and maintenance Fannie Mae guidelines for REOgrams are always met Servicer elimination/rescission notifications Conveyance of clear and marketable title to Fannie Mae 2015 Fannie Mae STAR Reference Guide Page 22 of 111

5.4 Servicer Capability Model Framework and Methodology > Operational Assessment Overview 5.4 Operational Assessment Overview The Operational Assessment is an evaluation of a servicer s ability to consistently deliver expected business results in accordance with established business objectives. The STAR Program is designed to: 1) Help servicers better manage their Fannie Mae business by Offering a consistent framework for benchmarking performance and capabilities Providing a comprehensive evaluation of servicers operational capabilities Identifying recommendations and targeted areas for improvement 2) Ensure servicers understand how to satisfy Fannie Mae s goals and objectives by Establishing a consistent methodology for comparing capabilities between servicers Tracking performance relative to Fannie Mae targets Improving transparency Providing a common vehicle for communication 3) Establish clear roles and responsibilities by Using Fannie Mae s Portfolio Management Team to serve as a central engagement resource Establishing clear terms of engagement Leveraging existing internal and external reviews, when appropriate 2015 Fannie Mae STAR Reference Guide Page 23 of 111

5.5 Servicer Capability Model Framework and Methodology > Operational Assessment Process 5.5 Operational Assessment Process The STAR Operational Assessment evaluates the servicer s capabilities to deliver expected results. Key measures and formal evaluations are used to assess the servicer s capabilities and competencies. Major steps in the assessment process are shown below. 2015 Fannie Mae STAR Reference Guide Page 24 of 111

5.5 Servicer Capability Model Framework and Methodology > Operational Assessment Process Process Level Profile A process level profile will be built for each servicer to provide information on the servicer s business environment and provide a baseline understanding of the company s operations. The STAR Program views the business architecture and the servicer s capabilities in context of the environment in which the servicer operates. A thorough understanding of the servicer s operating environment will provide context for the operational assessment. The Process Level profile will assist with more appropriate analysis of the Required Data and, and ultimately more accurate Evaluations. The following elements of the Process Level Profile are required for each Process Area: Organizational structure and scale of operations Organizational staffing overview, including capacity, recruitment, training, alignment and retention Technology and application environment Evaluation Fannie Mae will communicate a rating for each Business Process Area and Critical Success Factor based on the evaluation of SCM Performance Metrics and provided. Servicer ratings are determined based on performance in SCM primary metrics, if applicable, and a qualitative review of people, processes and technology. Assessment against the SCM, is described more fully in the next section. SCM Performance Metrics o o Servicer should demonstrate consistent performance for primary SCM performance metrics based on set thresholds or compared to other Fannie Mae servicers Consistent performance is determined by assessing month-over-month performance for a set timeframe Sufficiency of supporting evidence, which may include the following: o o o Direct evidence This type of evidence includes direct outputs or deliverables of processes or sub-processes under assessment. Examples include completed checklists, quality control reports, and a system of record notations. Indirect evidence Indirect evidence includes the artifacts used to support the execution of processes and sub-processes. Examples include process descriptions, training materials, presentations and templates. Affirmation evidence This type of supporting evidence is often helpful when the first two types of evidence are insufficient to rate the servicer s process or sub-process. Examples include servicer interviews and system demonstrations. Servicers are given an opportunity to respond to the evaluation and provide follow-up evidence. Fannie Mae, at its discretion, may consider the new evidence and update its assessment accordingly. 2015 Fannie Mae STAR Reference Guide Page 25 of 111

5.5 Servicer Capability Model Framework and Methodology > Operational Assessment Process Servicer Capability Model A SCM is a reference model that characterizes specific levels of process maturity. It is an effective way of benchmarking and improving performance and has been widely adopted across software development, project management, human resources and service industries. For each Critical Success Factor, Fannie Mae will communicate a Servicer Capability Model performance level rating. The SCM used in the STAR Program seeks to provide a common framework for identifying and prioritizing key improvements that will influence desired outcomes. The SCM will be applied consistently across all servicers to ensure fairness. Each level represents well-defined stages of specific capabilities in reference to targeted Process Areas. Each maturity level builds upon the previous level and serves as a foundation for eventually achieving a continuous improvement paradigm. STAR Program Servicer Capability Model Servicer Capability Maturity Model Maturity Levels Theme Attributes People Process Technology Overall Rating 5 Optimizing Management practices are continuously improved through root-cause analysis and innovation - Full alignment of goals with people processes, system, and metrics - Continuous improvement - Innovative management techniques - Processes fully aligned with corporate and customer goals - Continuous improvement focused on common-cause variations - Formal process for innovation - Full integration of industryleading servicing systems - Advanced use of analytics for continuous improvement - Automated defect detection and error handling 4 Managed 3 Standardized Quantitative and predictive models are used to manage and control work Management practices are standardized - Quantitative models used to manage demand and capacity - Organization-wide practice of knowledge management - Integrated recruitment, development, and retention - Organization-wide performancebased incentive program - Formal communication program - Comprehensive training - Quantitative goal setting - Detailed, quantitative metrics - Use of quantitative models to plan and manage processes - Standardized process definitions and documentation - Compliance to standardized processes - Repeatable outcomes - Enterprise system and data architecture models - Quantitative measurements - Governance controls built into workflow - Integrated servicing systems - Documented SDLC and change control processes - Governance established Green 2 Initial A foundation of basic management practices are beginning to take shape - HR processes are documented, but not standardized - Inconsistent incentive programs - Training limited to functional work and compliance - Processes exist, but not standardized - Metrics established in most areas, but not integrated - Not always repeatable - Mix between manual and automated systems - Some level of integration of data across the organization - Training focused on immediate needs Yellow 1 Undeveloped Informal, inconsistent management practices that do not always produce desired results - Difficulty attracting and retaining talent - No formal performance-based incentive program - Limited training - Process is not formally documented and controlled - Success depends on people, not process - Wide variation between functions - Highly manual IT systems - Few defined rules and policies that govern data and systems - No formal training Red 2015 Fannie Mae STAR Reference Guide Page 26 of 111

6.1 Organizational Overview and Shared Processes 6. SCM Organizational Overview and Shared Processes Process Area Assessment Assessment Area Organizational Overview and Shared Processes 6.1.1 Organizational Overview 6.1.2 Project Management 6.1.3 Business Process Management Not applicable 6.1.2.1 Standardized Practices 6.1.2.2 Project Documentation 6.1.3.1 Standardized Practices 6.1.3.2 Key Process Documentation 6.1.4.1 Internal Controls Framework Servicer organizational overview Project Management methodology Project documentation Business Process Management methodology Key Process documentation Internal control policies and procedures 6.1.4 Internal Controls 6.1.5 People Management 6.1.4.2 Exceptions Management 6.1.5.1 Incentives Framework 6.1.5.2 Workforce Development 6.1.5.3 Training Effectiveness Control exceptions Business Continuity Planning Regulatory Change Management Organization and structure of program Vacancies and fill times Executive experience levels Employee satisfaction Scope of training program 2015 Fannie Mae STAR Reference Guide Page 27 of 111

6.1.1 Organizational Overview and Shared Processes > Organizational Overview 6.1.1 Organizational Overview The organizational overview provides context to all Process Areas assessed by collecting information regarding the servicers overall structure, staffing and servicing portfolio. List of key servicing functions including: Geographic location(s) Department head Total # of Fannie Mae loans serviced Total # of non-fannie Mae loans serviced List of key vendors used including: Geographic location(s) Service provided # of Full Time Employees (FTE) for each vendor function performed Organizational Overview SCM Performance Metrics* * Metric details are available in the STAR SCM Performance Metric dictionary Open Positions # of currently open full time positions # of currently open part time positions # of currently open executive positions Workforce Management Fill times for staff Turnover rates by department Total # of FTE employees Total # of contract employees # of FTE for each location Training hours by department Employee tenure by department Employee mortgage and functional experience 2015 Fannie Mae STAR Reference Guide Page 28 of 111

6.1.2 Organizational Overview and Shared Processes > Project Management 6.1.2 Project Management Project Management is the governing methodology for planning, organizing, directing, monitoring, and controlling company resources to achieve specific organizational initiatives. Introduction Organizations with well-defined project management frameworks and methodologies successfully implement large initiatives in the most effective manner. Efficient Project Management ensures that investment decisions and resources are appropriately allocated to project initiatives that directly contribute to the success of accomplishing the organization s strategic objectives. Servicers are under increasing pressure by regulators, borrowers, shareholders and investors to continuously improve their business. These pressures lead to servicers initiating a wide range of company projects including small targeted campaigns, process enhancements, large complex system implementations and major business process re-engineering initiatives. A servicer s ability to standardize its project management practices mitigates the risk of project failures and maximizes the value delivered to its own organizational processes as well as to Fannie Mae-serviced portfolios. A project is a temporary activity the servicer undertakes to achieve stated objectives with a defined start date, budget, executive sponsors, resources and completion date. An enterprise view of planned and current investments helps determine how best to select and prioritize projects. Investment decisions and their planned returns need to be carefully managed to ensure key strategic objectives are given the greatest focus. The project management discipline has the benefit of substantial research, generally accepted methodologies, and best practices. Many organizations have customized execution frameworks that are tailored to their specific environments. The STAR Program does not endorse any specific methodology. 2015 Fannie Mae STAR Reference Guide Page 29 of 111

6.1.2 Organizational Overview and Shared Processes > Project Management 6.1.2.1 Standardized Practices Policies and procedures governing project management that are well documented and communicated across the organization facilitate a standardized project management methodology. Standard templates, tools, performance metrics, and change management practices used for all projects promote consistency in executing the company s strategic objectives. Assessment: Project Management methodology Adoption and application of project management standards, including change management and governance, are key indicators of a servicer s ability to consistently and accurately implement new Fannie Mae programs. Although Fannie Mae does not endorse any specific project management standards, it expects servicers to have established project management practices and to actively promote and apply such practices throughout the organization. Project Management: Standardized Practices: Project Management methodology Policies, Procedures and Documents describing project management standards, including: Reporting structure Change control and governance Communication and escalation requirements Major phases and steps Milestone reviews and approvals Project templates: Project charter and plans Timelines Cost estimations Risk and impact analyses Resource requirements Change requests Project approval sheets 2015 Fannie Mae STAR Reference Guide Page 30 of 111

6.1.2 Project Management > Project Management Evaluation and Recommendations STAR Program evaluation of project management consists of the following: Quality documentation of project management methodology. Documentation of established control measures to ensure the methodology is applied consistently across all Fannie Mae-related projects. Review for adequacy of industry standard applications used for tracking progress, identifying risks and integration with other projects or processes. Templates and tools are widely available to promote adoption of the methodology across all departments. STAR Program evaluation of project change control and governance consists of the following: Change management and governance process is established for all projects. Policies and Procedures for project management are comprehensive, well documented and communicated effectively for planning, executing and managing project change. Appropriate levels of authority are current and up to date for project oversight. Project management staffing and training: Qualified personnel are assigned the responsibility of tracking the status of all Fannie Mae projects. The status should be updated on at least a monthly basis. Training toward certifications in widely practiced methodologies, such as the Project Management Institute s Project Management Professional Certification, is encouraged. STAR Program recommendations may consist of the following: Improvements to project management methodologies, policies, procedures, process flows, and governance documentation. Best practices that could be implemented to improve overall project performance. Tools and applications that could enhance tracking, reporting, and oversight. 2015 Fannie Mae STAR Reference Guide Page 31 of 111

6.1.2 Organizational Overview and Shared Processes > Project Management 6.1.2.2 Project Documentation Formal project management documentation provides a basis for establishing communication, project scope, risk analysis, resource allocation, and tracking mechanisms for adaptability to change. Assessment: Project documentation Project catalogs/inventories increase visibility into current projects and allow management to quickly assess current use of resources across all business projects. Project documents should describe project charter, type, business objectives, plan, resources, key stakeholders and sponsors, key risks, deliverables, and status updates. Documents should contain project dates, versioning control and appropriate approvals, and must be well communicated to all parties relevant to the project. Project Management: Standardized Practices: Project documentation Project charter detailing project team structure, organizational impact analysis and key project control risks Documented project timelines with well notated milestones All project documentation is current with revision dates notated Project catalog / inventory Evaluation and Recommendations Project catalogs/inventories should include: Primary business area in which the project is chartered. Process area the project is addressing (e.g., Customer Service, Investor Relationship Management, Foreclosure Referral, Loss Mitigation Solution Delivery). Primary business needs driving the project (e.g., Technology, Compliance, Campaigns). Specific Fannie Mae goal the project is addressing. Importance of the project relative to other initiatives (priority). Types of risk that could jeopardize the successful outcome of the project (e.g., Complexity, Resource, Cost). Project start date and scheduled end date. Current status of project. Dedicated project manager and project sponsor. 2015 Fannie Mae STAR Reference Guide Page 32 of 111

6.1.2 Organizational Overview and Shared Processes > Project Management Project documentation is comprehensive and describes at a minimum: Scope This answers the who, when, what, and where of the project. Project plan What needs to be accomplished and how the team plans to get there. Completeness of roles and responsibilities For project execution, the document clearly identifies project participants and stakeholders. It also outlines individual responsibilities regarding deliverables and timeframes. Communication of project goals Clear communication strategies are adopted and stakeholders are informed on a regular basis through the use of formal group and individual meetings, emails, and other communication media. Current documentation Project documents are updated frequently. Accessibility of project documentation by associates Project documents are available in an easily accessible location by project associates and their supervisors. Change Control Changes for specific projects are well documented and appropriate sign-offs are obtained. Versioning control Ensures project documents are actively managed. Qualified individual(s) Those assigned to maintain a list of all Fannie Mae projects and statuses are well trained and qualified. 2015 Fannie Mae STAR Reference Guide Page 33 of 111

6.1.3 Organizational Overview and Shared Processes > Business Process Management 6.1.3 Business Process Management Business Process Management is the application of common, standardized practices to ensure that a servicer s set of activities is accomplished effectively and efficiently. Introduction Leading practices show that organizations with well-defined Business Process Management frameworks and methodologies are able to integrate effective designs and execute key business functions. Mature and efficient companies define and adapt key business processes to remain flexible to the changing needs of customers, clients, investors, regulatory agencies, and internal business users. Maintenance of a Business Process Model or architecture supports a top-down approach for analyzing operational and technical decisions. End-to-end process flows serve as a standardized blueprint of company operations to help identify impacts on costs, controls, risks, and other metrics. This enables company management to strategically align resources, reduce redundancies, and make tactical investments that promote a continuous improvement framework. Process management documentation is a prerequisite for effective governance, mitigating financial risk, and maintaining an adequate control environment. Regulators, auditors, internal audit, and compliance teams all require views into how business processes are documented and communicated. Fannie Mae is interested in the quality of documented key business processes and the relationships between all key business functions. Servicers should demonstrate an understanding of business transaction flows, interdependencies of multiple system applications, and departmental control flows. 2015 Fannie Mae STAR Reference Guide Page 34 of 111

6.1.3 Organizational Overview and Shared Processes > Business Process Management 6.1.3.1 Standardized Practices The development, establishment and consistent application of process practices facilitate continuous improvement and the elimination of redundancies throughout the organization. Assessment: Business Process Management methodology Applied business process management standards, including change management and governance, are key indicators of a servicer s ability to consistently and accurately deliver quality service to customers, clients, and investors. Change management and governance may include identifying a need for a change, requesting change, analyzing change impact, mitigating risks, implementing change, and receiving appropriate approvals. Although Fannie Mae does not advocate any specific documentation standards, it expects servicers to develop and maintain a set of company-wide standards in managing process documents (e.g., policies and procedures), job aids (e.g., checklists and call scripts), tools (e.g., income calculation sheets), templates (e.g., letters to borrowers), and metrics (e.g., cycle time) which are applied consistently throughout the company. Business Process Management: Standardized Practices: Business Process Management methodology Policies, procedures and documents describing business process management standards, including: Business process architecture Procedure for managing and introducing process revisions Business ownership and governance responsibilities Sample process management templates: Process map format and symbols (notation) Standard metrics formats and descriptions Narratives or process descriptions Job aids Training documents Standard change requests Examples of process change approval sheets with signatures, titles and dates 2015 Fannie Mae STAR Reference Guide Page 35 of 111

6.1.3 Organizational Overview and Shared Processes > Business Process Management Evaluation and Recommendations STAR Program evaluation of business process management consists of the following: Key measures are defined and monitored to gauge the effectiveness of processes. Established control measures ensure that the process methodology is applied consistently between individuals and work groups. Templates and tools are widely available to promote adoption of process standards across all departments. Process management update/creation pipeline contains a reasonable volume of activity given business demands and includes prioritization to balance workloads. STAR Program evaluation of process change control and governance consists of the following: Policies and Procedures for business process management are comprehensive, well documented, and communicated effectively for planning, executing, and managing process changes. Impact analyses are carried out adequately before process changes are approved. List of approvers for proposed process changes is maintained and current. A process exists to validate new or revised policies and procedures prior to implementation. A process exists to ensure policies, procedures, and processes are updated to reflect remediated control deficiencies. STAR Program recommendations may consist of the following: Improvements to process management methodologies, policies, procedures, process flows, and governance documentation. Best practices that could be implemented to improve overall process performance. Tools and applications that could enhance tracking, reporting, and oversight. 2015 Fannie Mae STAR Reference Guide Page 36 of 111

6.1.3 Organizational Overview and Shared Processes > Business Process Management 6.1.3.2 Key Process Documentation Process documentation provides a foundation for communication, risk analysis, resources allocations, and tracking mechanisms for flexibility and adaptability to process changes. Naming conventions, common templates, and software application tools are typically used to display all business functions. Assessment: Key Process documentation Business Process Management: Standardized Practices: Key Process documentation All policies, procedures, and support documents including templates, flowcharts, metrics, and job aids related to the key processes need to be documented, versioned, dated, and maintained in an easily accessible location such as a shared drive or online procedure repository. Evaluation and Recommendations Process documentation management policies and procedures are evaluated for structure, symbols and notation standards, approval requirements, and versioning control. Key processes are evaluated for: Completeness Complete descriptions with no missing areas Currency Prompt updates to documents reflecting changes Accuracy Documents match practiced processes Clarity Structured logically and written in simple language Accessibility Easily accessible by associates Documentation, maps and flows contain the following elements: Objectives of the process Participants, stakeholders, customers, and business owners Inputs and sources (suppliers, forms, data and information) Activities Applications and databases Key controls may be mapped to process activities Outputs (the product or servicer s definition of intended outcome) 2015 Fannie Mae STAR Reference Guide Page 37 of 111

6.1.3 Organizational Overview and Shared Processes > Business Process Management Verification that documented processes are consistently followed, as demonstrated by work products between individuals and work groups. Periodic audits are conducted to ensure that employee s actual work processes are consistent with the process map flows and descriptions. Centralized repository for all process documentation is maintained either physically or electronically. Appropriate personnel are assigned and trained to ensure effective Document Management. A centralized document management group oversees all document-related processes, systems, and policies. Process owners are assigned and sufficient authority is granted to improve processes. Employees and supervisors are trained in an effective and timely manner on all business process methodologies. Refresher courses should also be offered regularly. 2015 Fannie Mae STAR Reference Guide Page 38 of 111

6.1.4 Organizational Overview and Shared Processes > Internal Controls 6.1.4 Internal Controls Internal control environments form a basis for companies to effectively manage activities in order to meet business, financial and regulatory requirements. Compliance and Audit play critical roles in establishing an organization s framework for internal controls and risk management. Introduction In today s regulatory environment, servicers are required to comply with standards established by numerous regulators, government agencies, investors, and rating agencies. Executive management must establish a culture that demonstrates a commitment to Compliance and Audit activities. These activities should be well communicated throughout the organization and well documented with standardized policies, procedures, and guidelines that define all business processes. The ability to organize, govern and manage these programs and address results from audit and review exercises is vital to the company s success. The STAR Program does not endorse any specific risk management, internal controls or auditing methodology. However, it does expect servicers to develop, establish and follow a set of established standards for effectively managing and responding to identified control deficiencies or risks. 6.1.4.1 Internal Controls Framework Implement standardized processes for internal controls. Servicers are expected to communicate and enforce an environment that supports internal control activities throughout the organization. Servicers should test their internal controls periodically to evaluate the effectiveness of their internal control environment. Additional tests of controls may be required depending on circumstances such as the introduction of a new regulation, amendment of an accounting standard or a significant change in a servicer s operations. Assessment: Internal Control policies and procedures Well documented standardized processes, controls, policies, procedures and guidelines ensure effective risk management. Internal Controls: Internal Controls Framework: Internal Control policies and procedures Standardized policies and procedures surrounding internal control environment Standardized policies and procedures surrounding internal control testing and effectiveness Evaluation and Recommendations Documents are easy to read and understand. 2015 Fannie Mae STAR Reference Guide Page 39 of 111

6.1.4 Organizational Overview and Shared Processes > Internal Controls 6.1.4.2 Exceptions Management Assessment: Control exceptions Control deficiencies are identified through preliminary walkthroughs, substantive testing, and various audit and oversight activities. Internal Controls: Exceptions Management: Control exceptions Policies, Procedures and Document describing the process for: Documenting and identifying exceptions Documenting and monitoring action plans Validating remediation Assessment: Business Continuity Planning Business continuity plans allow for core operations to continue in the event of a disruption to normal business activities. Internal Controls: Exceptions Management: Business Continuity Planning Policies, Procedures and Document describing the process for: of business continuity plan including disaster recovery requirements Description of the process for updating and testing the plan Documentation of the most recent test of the plan including date and lessons learned 2015 Fannie Mae STAR Reference Guide Page 40 of 111

6.1.4 Organizational Overview and Shared Processes > Internal Controls Assessment: Regulatory Change Management The mortgage servicing industry is expected to address a growing range of regulatory changes and requirements timely and effectively. Servicers should have documented policies and procedures in place to ensure regulatory changes are captured, communicated, and implemented across the organization. Internal Controls: Exceptions Management: Regulatory Change Management Policies, Procedures and Document describing the process for: Identification and assessment of regulatory changes that may impact the organization Communicating regulatory changes throughout the organization Tracking regulatory changes to ensure they are implemented and followed of an implemented industry-wide regulatory change Evaluation and Recommendations Internal Control Environment Control deficiencies or gaps and identified and addressed with the appropriate stakeholders in a timely manner Controls or compensating controls have been implemented to address deficiencies Newly implemented controls/processes have been communicated to all stakeholders. Business continuity plans should include plans for: Timely recovery of critical data Resources to access key systems Communications to internal and external parties for any temporary changes to business The regulatory change management process should include: Standard protocols for the identification and assessment of regulatory changes Standard communication templates Monitoring and testing the implementation of regulatory changes A designated group responsible for the management of all regulatory changes and requirements Group responsible for managing regulatory changes has the proper skill set and qualification to interpret regulatory guidance 2015 Fannie Mae STAR Reference Guide Page 41 of 111

6.1.5 Organizational Overview and Shared Processes > People Management 6.1.5 People Management People Management is an integrated framework of practices for employee recruitment and retention, work organization, performance management, and training to meet the servicer s current and future business needs. Introduction The management framework and processes for People Management are critical to ensure that a servicer is prepared to meet the evolving needs of the market and the complexities of its portfolio. Skilled employees with competitive and results driven incentive structures, training programs and professional development tools provide a competitive advantage that differentiates servicing organizations and promotes excellent customer value. Management teams with appropriate subject matter expertise and diverse experience provide a solid business operating environment. A servicer s ability to recruit, develop, and retain talent assists the company in achieving operational objectives and enhancing customer service. 6.1.5.1 Incentives Framework Assessment: Organization and structure of program Well-designed incentive programs consist of many factors including the compensation tied to performance, frequency of payout, and scope of availability to earn an incentive to improve performance on a key function. Additional elements (e.g., payout frequency, participation, and drivers) of incentive programs are assessed in the appropriate business process areas within the STAR Program. People Management: Incentives Framework: Organization and structure of program Incentive program descriptions for organization 2015 Fannie Mae STAR Reference Guide Page 42 of 111

6.1.5 Organizational Overview and Shared Processes > People Management Evaluation and Recommendations The scope, type, and structure of the servicer s incentive program are aligned with Fannie Mae s goals. Performance measurements are based on specific, measurable, achievable, realistic, and timebound goals. Incentive programs are well designed to minimize the risk of paying for an activity instead of performance based results (e.g., participants game the system ). Eligibility criteria is directed to the staff who directly contribute to outcomes of interest to Fannie Mae is measured and incentives are tied to results. The program is communicated effectively to all personnel. Incentive programs are consistently applied throughout the company. Communication documents are easy to understand by all levels of employees. 6.1.5.2 Workforce Development Overview Assessment: Vacancies and fill times The number of current open positions and time-to-fill open positions at all levels of the servicing organization are factors that influence effective organizational performance. People Management: Workforce Development: Vacancies and fill times Recruitment reports Organization charts showing open positions Assessment: Executive experience levels Experience levels and the tenure of executive personnel employed at Fannie Mae servicers contribute to effective leadership in a high performing organization. People Management: Workforce Development: Executive experience levels Executive level organization chart including tenure with the company 2015 Fannie Mae STAR Reference Guide Page 43 of 111

6.1.5 Organizational Overview and Shared Processes > People Management Assessment: Employee satisfaction Employee satisfaction surveys are important inputs to design effective recruitment and retention programs, reduce turnover rates and gauge morale within the company, management team, and other related factors. People Management: Workforce Development: Employee satisfaction Recent employee satisfaction survey results, including percent meeting the company s satisfaction criteria Trending analysis Documented management actions resulting from surveys Evaluation and Recommendations Recruitment, retention, and employee satisfaction measures are consistently applied throughout the company. 6.1.5.3 Training Effectiveness Assessment: Scope of training program The depth, organization, and frequency of training activities are a component of Fannie Mae s assessment. People Management: Training Effectiveness: Scope of training program Training course list Certification reports Sample training materials Evaluation and Recommendations Training effectiveness is evaluated through a review of servicer workforce development framework. Training resources are available and easily accessible. The breadth of topics and depth of coverage are comprehensive, particularly those related to the Fannie Mae Servicing Guide. A wide range of delivery mechanisms, including classroom, web-based, on-the-job, and mentoring, is used to make training effective. 2015 Fannie Mae STAR Reference Guide Page 44 of 111

7.1 General Servicing 7. SCM Business Processes 7.1 General Servicing General Servicing refers to a set of activities a servicer performs to fulfill contractual obligations with the borrower and investor while protecting the underlying assets of the investor. Process Area Critical Success Factor Assessment Area 7.1.1 Investor Reporting and Accounting 7.1.2 Loan Administration 7.1.3 Customer Service 7.1.4 Investor Relationship Management 7.1.5 Vendor Management 7.1.1.1 Investor Reporting and Custodial Reconciliation 7.1.2.1 Escrow Administration 7.1.2.2 Loan On and Off Boarding 7.1.3.1 Call Center Operations 7.1.3.2 Call Center Demand-Capacity Management and Balancing 7.1.3.3 Customer Satisfaction 7.1.3.4 Escalations 7.1.4.1 Partnership and Cooperation 7.1.4.2 Review Finding Results and Remediation 7.1.4.3 Fannie Mae Data Requests 7.1.5.1 Vendor Selection 7.1.5.2 Vendor Management and Oversight Fannie Mae Cash Reporting and reconciliation Fannie Mae delinquency status reporting Escrow analysis Escrow management Escrow disbursements Communication On boarding Off boarding Call center reporting Call monitoring Call volume and workforce management Customer satisfaction surveys Written Communication Escalations management Engagement and participation in new initiatives and products Compensatory fees, penalties and indemnification payment management Completeness, timeliness and resolution of review findings and action plans Timeliness, completeness and accuracy of servicer provided data Process for vendor selection Management and oversight of vendors Vendor communication 2015 Fannie Mae STAR Reference Guide Page 45 of 111

7.1 General Servicing Introduction One of the primary functions of mortgage servicers is to successfully manage relationships with their two main customer groups: investors and borrowers. A servicer s value is demonstrated through meeting contractual obligations, achieving investor expectations and understanding and fulfilling customer expectations. General Servicing includes processes related to managing these relationships, except those specific to Default Management. In partnering with investors, General Servicing processes must adhere to investor-specific guidelines focused on reporting and accounting and have clear communication channels to respond quickly and effectively to investor requests and initiatives. These processes must be well defined and regularly audited to ensure accuracy and timely delivery of information. To support borrowers, servicers perform activities centered on customer service, payment, and escrow administration. Servicers must have clear communication channels to respond quickly and efficiently to borrower inquiries, requests, and needs. Borrowers expect accessibility on a 24/7 basis with a diverse set of delivery channels. Payment administration involves accurate and timely posting of payments, tax and insurance disbursements, and borrower payment adjustments consistent with regulatory and contractual compliance. While General Servicing departments do not directly handle default management, they must facilitate interactions with these groups to support default management processes. Process Level Profile The STAR Program requires Organizational and Shared Process information related to the various functions under scope. The focus of Organizational information is on scale, complexity, and broader environmental factors while that of Shared Processes is on people, process and technology dimensions. Applications used to support the processes, the extent of automation / integration between the various modules and the maturity of control procedures are reviewed. People management practices are also reviewed. This requires servicers to provide key metrics identified in the following table and supporting documentation. Specific focus areas for required data include performance metrics and staffing information used across all critical success factors within the Collections and Loss Mitigation section of the guide. 2015 Fannie Mae STAR Reference Guide Page 46 of 111

7.1 General Servicing 7.1. General Servicing: Process Level Profile Organizational Overview # of geographic locations Outsourced functions Key vendor relationships Description of organization structure including span of control Applications and Environment Major applications and their versions by department Degree of module integration and # of manual workarounds Application documentation Controls procedure documentation People General Background Incentives Recruitment & retention Capacity management Training # of FTEs and part time employees by function Average # of years of mortgage experience by function o Staff Average # of years of respective functional experience by function o Staff # of employees participating in incentive program by function # of open positions by function o FTE o Part time Fill times by department Turnover rates by department o Staff o Supervisors o Managers Work load o Investor Reporting # of loans and/or pools # of staff o Custodial Recon # of bank accounts # of investors # of staff o Call Center # of calls # of supervisors # of managers o Escrow # of staff # of supervisors # of managers # of total hours of training by function # of hours of Fannie Mae related training by function For Investor Reporting, % of employees that completed the Housing Finance Institute (HFI) training on investor reporting of compliance training For Investor Reporting, staffing model based on o Loan count o Investors o Type Actual/Actual Scheduled/ Scheduled Adjustable Rate Mortgage (ARM) loan count Delinquency Loan Modification Volume Skills assessment practiced 2015 Fannie Mae STAR Reference Guide Page 47 of 111

7.1 General Servicing Investor Reporting and Accounting Metrics* 7.1 General Servicing: Process Level Profile (continued) Beginning hard reject rate Ending hard reject rate Aged recurring hard reject rate Multi-occurrence hard reject rate Beginning soft reject rate Ending soft reject rate Customer Service Required Metrics* % of call sampled (monitored) for quality # of call monitored per agent per month % of agents monitored each month IVR handle rate Total calls offered Total calls answered Aged recurring soft reject rate Multi-occurrence soft reject rate Shortage percent Average daily shortage amount Negative pool deficiency average amount Total FTE agents Average hours working call queues Average speed to answer Abandonment rate Average handle time Blockage rate Surplus percent Positive pool deficiency average amount Negative pool deficiently rate Positive pool deficiency rate Total # of Investor Reporting and Accounting (IR&A) FTE employees Automated Clearing House (ACH) enrollment First call resolution rate Volume of written correspondence Average response time to written correspondence Volume of escalations Average resolution time for escalations Investor Relationship Management Metrics* # of issues cited requiring a formal % of issues cited requiring a formal servicer action plan servicer action plan which were # of issues cited requiring a formal escalated servicer action plan which were escalated Fannie Mae data request performance * Metric details are available in the STAR SCM Performance Metric dictionary Compensatory fee payment performance 2015 Fannie Mae STAR Reference Guide Page 48 of 111

7.1.1 General Servicing > Investor Reporting and Accounting 7.1.1 Investor Reporting and Accounting Investor Reporting and Accounting provides investors/guarantors with the information required to manage their investment and ensure timely cash flows. The key to maintaining a strong relationship and reassuring investors that their assets are being protected and properly accounted for is timely and accurate data on the performance of their portfolio. The relationship with the investor may take various forms depending on the type and volume of loans being serviced and the investor s reporting requirements. CSF: 7.1.1.1 Investor Reporting and Custodial Reconciliation: Maintain timely and accurate reporting, remitting and portfolio reconciliation processes, and reconciled custodial bank accounts. Given the significant financial implications for the borrower, the servicer, and the investor, accurate transaction information and exceptions reconciliation must be made in a timely manner. Appropriate processes must be maintained and supported by an integrated system and conducted by well-trained personnel to ensure that the timeliness and accuracy objectives are met. Assessment: Fannie Mae Cash Reporting and Reconciliation Investor Reporting and Accounting: Investor Reporting and Custodial Reconciliation: Cash Reporting and Reconciliation Exception monitoring reports Fannie Mae Master Servicing Servicer Scorecard Exception Resolution policies/goals Servicer Quality and Risk (SQR) Cash Management Review results and report Quality Control process documentation Performance standard documentation Provide forms and reconciliation reports that exhibit the servicer s ability to effectively manage the investor reporting process 2015 Fannie Mae STAR Reference Guide Page 49 of 111

7.1.1 General Servicing > Investor Reporting and Accounting Assessment: Fannie Mae delinquency status reporting Servicers are responsible for providing a monthly update on all delinquent loans. Data requested includes the reason for a default, any actions taken by the servicer to resolve the delinquency, and the date of such actions. To transmit this information to Fannie Mae, a servicer sends a file with delinquency status codes (to describe the actions taken by the servicer) as well as codes describing the primary reason for delinquency. Details of servicer reporting requirements are provided in the Fannie Mae Servicing Guide. Investor Reporting and Accounting: Investor Reporting and Custodial Reconciliation: Delinquency status reporting Delinquency Status Reports submitted within the last 12 months Evaluation and Recommendations Investor reports are generated daily and meet the needs of the investor reporting and remitting requirements function, particularly accounting methods, cutoff, and remittance frequencies, as well as the ability for automatic reconciliation functionality. Processes defined and used to review bank remittance reports are adequate and timely. Metrics in the report include a comprehensive set of data information on payoffs, principal and interest collections, curtailments, loan modification transactions, and foreclosure/liquidations. Investor reporting and custodial account reconciliations and exceptions are handled accurately and effectively by competent, well-trained, and experienced staff. To develop staff competencies, leading practitioners cross train employees in multiple areas, including cash processing, investor reporting and custodial account reconciliation. Review of bank statement/report of cash activities versus remittance report identifies and resolves any differences. All exceptions are resolved before the next reconciliation cycle. Reporting system s ability to meet the needs of the custodial account reconciliation function, particularly the automatic reconciliation functionality, is adequate. Also, the extent with which the system is integrated with other servicer functions is assessed. Quality Control (QC) or secondary reviews of custodial account reconciliations are conducted on a regular basis. Duties among cash processing, investor reporting, and custodial account reconciliation are segregated. Personnel and systems are optimized to ensure timeliness and accuracy. Continuous Improvement practices are in place with the ability to track, age, analyze, and use quantitative metrics to reduce the number of monthly reporting/remitting exceptions. In particular, when exceptions are discovered, there are formal processes to address and find root causes. 2015 Fannie Mae STAR Reference Guide Page 50 of 111

7.1.1 General Servicing > Investor Reporting and Accounting Effective exception handling procedures should be in place to ensure the servicer complies with the guidelines. Servicers should generate exception reports to identify errors on Fannie Mae Delinquency Status reports. Servicers should implement procedures and processes to address errors and corrections on Fannie Mae Delinquency Status reports in a timely manner. 2015 Fannie Mae STAR Reference Guide Page 51 of 111

7.1.2 General Servicing > Loan Administration 7.1.2 Loan Administration Servicers should have processes to handle general servicing functions regarding escrow administration and the on and off boarding of loans. Each year, the servicer should analyze each escrow account to determine that the balance is adequate and, if necessary, make any adjustments to meet the estimated future charges. In addition, servicers should provide all appropriate parties timely notification of their escrow analysis, where applicable. Servicers should have a process to ensure timely and accurate disbursements of real estate taxes, special assessments, hazard and flood insurance premiums, mortgage insurance, and other escrow related advances. Servicers should have reporting to track all escrow account disbursements and any aged payments that are past due. Servicers should have appropriate controls and adequate procedures for the on boarding of new loans and off boarding of existing loans to avoid any delayed application of borrower payments of principal, interest, taxes or insurance. CSF: 7.1.2.1 Escrow Administration: Escrow accounts are administered by trained and qualified staff in accordance with the requirements in the mortgage loan documents and all applicable laws, government regulations, and investor requirements. Assessment: Escrow Analysis Servicers should have procedures to ensure all servicer escrow responsibilities are defined, monitored, and executed in an accurate and timely manner. Servicers should perform an annual analysis of escrow accounts to determine overages, shortages, or deficiencies, and notify the borrower of any changes. Additionally, servicers should develop and maintain escrow analysis service levels to ensure they have the capacity and scalability to perform analyses as workloads adjust. Loan Administration: Escrow Administration: Escrow Analysis Sample of procedures for escrow analysis activities, in adherence to all applicable laws, government regulations, and investor requirements Vendor scorecards used to assess performance for third parties that provide escrow analysis activities Sample training materials for analysis Sample quality control processes for escrow analysis activities 2015 Fannie Mae STAR Reference Guide Page 52 of 111

7.1.2 General Servicing > Loan Administration Assessment: Escrow Management Servicers should have processes to identify when escrow accounts should be established. In addition, servicers should have procedures on how escrow accounts are set up and managed in accordance with all laws, regulations, and investor requirements. Servicers should also have controls to ensure escrow accounts are established timely and accurately. When determining borrower eligibility for foreclosure prevention alternatives, servicers must retain all documents and information related to escrow set-up, escrow analysis, and escrow advances. Loan Administration: Escrow Administration: Escrow Management Sample procedures for establishing escrow accounts along with required implementation timeframes Sample training materials for escrow management, including how and when escrow accounts are established and document retention related to escrow activities of document retention for escrow activities Assessment: Escrow Disbursements Servicers should have procedures to ensure that taxes, insurance, and assessment payments made on behalf of the borrower are timely and accurate. Servicers must also ensure that any escrow surplus due to the borrower is paid in a timely manner. Servicers must also certify that they are complying with any laws, regulations, or contracts related to a borrower s escrow deposit account and other collateral accounts (including those that are required to pay interest on a borrower s escrow deposit account). Loan Administration: Escrow Administration: Escrow Disbursements Description of procedures used to manage escrow disbursements Vendor scorecards used to assess performance for third parties providing escrow disbursement services Sample reporting to track all escrow account disbursements and any aged payments that are past due Sample exception reports showing impending escrow payments Documentation of adherence to any laws, regulations, or contracts related to a payment of interest on a borrower s escrow deposit account 2015 Fannie Mae STAR Reference Guide Page 53 of 111

7.1.2 General Servicing > Loan Administration Evaluation and Recommendations Escrow Accounts are administered by: Trained, qualified staff. If mortgage insurance, hazard insurance, flood insurance functions, and tax services are performed by third parties, third party activities are monitored and managed (if applicable). Escrow Accounts are administered in compliance with the mortgage documents, all applicable laws and government regulations, such as Real Estate Settlement Procedures Act (RESPA), and investor requirements. At a minimum, an annual analysis is performed on all Escrow Accounts and servicers send the borrower a notification detailing any pending changes at least 30 days prior to the payment change date. Escrow Accounts are established in adherence to all applicable laws, regulations and investor requirements, and are managed accordingly. Documentation and information on escrow activities is retained as stated in the Fannie Mae Servicing Guide. Escrow Account administration includes processes to ensure: Borrowers are notified of overages, shortages, and deficiencies identified during the escrow analysis and the servicer has processes to appropriately recoup escrow account shortages and/or deficiencies and refund escrow account overages. Escrow Account disbursements: For taxes, insurance and assessments, payments are made in a timely and accurately manner. Refunds are returned to the borrower in a timely fashion following mortgage payoffs or escrow account overages identified via escrow analysis, as appropriate. Servicers should have procedures to detect when escrow items are not paid when due: Reports are in place to monitor past due payments. The mortgage accounting system provides tickler reports to prompt payment of items as they become due. 2015 Fannie Mae STAR Reference Guide Page 54 of 111

7.1.2 General Servicing > Loan Administration CSF: 7.1.2.2 On and Off Boarding: Loan on and off boarding involves coordinating data and the transfer of information when loans are boarding or de-boarding the servicer s loan servicing system. The success of a transfer is based on the new servicer s ability to address all servicing aspects of the loans in a timely manner and in accordance with the Fannie Mae Servicing Guide and applicable laws. The transfer process should have minimal borrower impact and a defined hand off process for loans in different statuses including but not limited to loss mitigation, foreclosure, bankruptcy or litigation. The transfer strategy is based on the servicer s ability to accurately reconcile and balance loan data files and ensure continuity of servicing. In addition, servicers must obtain Fannie Mae s approval of all transfers, in writing, prior to the transfer. Assessment: Communication Servicers must ensure they have adequate processes and controls to notify borrowers of changes affecting the servicing of their loan. Both parties are responsible for notifying borrowers whose mortgages are being transferred as required by the Real Estate Settlement Procedures Act. Transferee servicers that are boarding new loans are expected to have sufficient and dedicated staff to handle borrower inquiries and communication throughout the transition period. In addition, policies and procedures should be in place to notify third parties, such as insurance carriers, tax services, document custodians and foreclosure and bankruptcy attorneys, of servicing transfers. Loan Administration: Loan On and Off Boarding: Communication Welcome letter Goodbye letter Third party notices Policies and procedures for notifying borrowers and third parties of servicing transfers 2015 Fannie Mae STAR Reference Guide Page 55 of 111

7.1.2 General Servicing > Loan Administration Assessment: On boarding Established on boarding processes should be in place to ensure pre- and post-transfer activities occur in a timely manner, are accurate, and do not disrupt service to the borrower. The transferee servicer should have procedures to quickly identify if loan transfer files contain all necessary information to complete the on boarding process. A smooth transition requires the transferee servicer to work with the transferor servicer to answer any questions or resolve any disputes regarding the transition. Staff and facilities should be prepared to handle all of the normal servicing and accounting transactions, as well as all of the borrowers inquiries regarding the transition. When the servicing transferee receives the Principal and Interest (P&I) and Taxes and Insurance (T&I) custodial funds, experienced staff should be designated to handle the reconciliation process. If the transferor servicer has advanced delinquent interest or scheduled principal and interest to Fannie Mae, funds should be reimbursed to the transferor servicer as soon as a final account of all funds is received. All net amounts owed must be paid to the appropriate party on the effective date of the transfer. On boarding checklist Loan Administration: Loan On and Off Boarding: On boarding Transfer instructions or documented process Policies and procedures for reconciling all P&I and T&I custodial account, suspense and loss draft balances Documentation for reconciling mortgage assignments Documentation for requesting transfer of custody of Mortgage Backed Securities (MBS) loan documents to the transferee s custodian (if applicable) Policies and procedures for reconciling loan documents and mortgage files and records from the transferor, including any mortgages that are in foreclosure, bankruptcy or loss mitigation, and for any properties acquired by foreclosure or Mortgage Release Documented process for handling mortgages in litigation, the process of foreclosure or bankruptcy, and information for the attorneys (or trustee) handling the cases Process documentation for evaluating required capacity to support servicing transfer of scripts and tracking reports for welcome calls 2015 Fannie Mae STAR Reference Guide Page 56 of 111

7.1.2 General Servicing > Loan Administration Assessment: Off boarding To effectively transfer loan data files and information, the transferor servicer must provide detailed servicing records, including borrower information, loan status, Fannie Mae investor reporting and cash management information (including reports, transaction histories, litigation information, and all other loan account specific information that is deemed necessary to accurately service a borrower s mortgage loan). In addition, all documents applicable to a loan should be transferred, including copies of the servicing files and custody documents. Cash management is an integral part of the loan servicing transfer process. Both the servicing transferor and transferee should ensure they appropriately manage balancing the inflow and outflow of cash transactions prior to and after the transfer period. Efficient cash management processes include handling the transfer of borrower balances, borrower payments and/or payoffs, custodial balances, recoverable advances, and reconciliation issues. Off boarding checklist Loan Administration: Loan On and Off Boarding: Off boarding Transfer instructions or documented process Policies and procedures for forwarding all P&I and T&I custodial account balances Documentation for preparing mortgage assignments Policies and procedures for transferring custody of MBS loan documents and mortgage files and records to the new servicer Policies and procedures for notifying the new servicer of any mortgages that are in foreclosure, bankruptcy or loss mitigation, and for any properties acquired by foreclosure or deed-in-lieu Documented process for notifying the new servicer of all escalated items including litigation 2015 Fannie Mae STAR Reference Guide Page 57 of 111

7.1.2 General Servicing > Loan Administration Evaluation and Recommendations Communication: Dedicated team or single point of contact (SPOC) is in place to handle loan servicing transfers. Servicer provides the borrower with a follow up phone call or email after the welcome letter is sent. Internal communication exists among the business units affected by loan servicing transfers. On and off boarding: Servicer has an established process to identify and handle missing loan file information. When there are missing documents, an escalation process should be in place to immediately request the missing documents from the transferring servicer. Servicer transfer requirements and instructions should include defined deadlines or completion dates and include specific information on data transfer reports and file formats. It is a leading practice for servicers to use electronic data transfers and files. Servicers efficiently verify and validate the data boarded onto the loan servicing systems compared to the loan documents. A detailed execution plan is used for on and off boarding loans and transferring data. Impact analysis should be conducted to determine necessary resources required to manage transfers before and after transfers occur. Comprehensive on and off boarding checklists should include all necessary documentation for each area within servicing including collections, loss mitigation, bankruptcy, foreclosure, IR&A, escrow, and litigation. Example: correspondence, letters or documents, requests, invoices, loan histories and comments, complete remittance history, a listing of all deals in progress, partial packages and trial modifications, last escrow analysis, ARM plans and details. Servicers are expected to handle post transfer items (i.e. missing data, documents, files) timely. Regular meetings should occur during the transfer period and include a final reconciliation of required deliverables including deadlines. Servicers use Fannie Mae provided job aids regarding servicing transfers including required forms and approvals. 2015 Fannie Mae STAR Reference Guide Page 58 of 111

7.1.3 General Servicing > Customer Service 7.1.3 Customer Service The customer service area serves as the integral link between the servicer and the borrower by answering customer inquiries and retaining goodwill through relationship management. Customer service contact centers have evolved from handling borrower inquiries to being proactive in the identification of at risk borrowers, cross selling products and providing initial education and counseling to distressed borrowers. Technological advances allow borrowers to access their account information on a 24/7 basis. CSF: 7.1.3.1 Call Center Operations: Develop and maintain a set of key measures to help manage the call center. Assessment: Call Center reporting Servicers need systems that track a balanced set of call center metrics. Call center scorecards are effective measurement tools that servicers should develop to compute overall call center performance measures. Scorecards can be used to identify effectiveness of technology or strategy changes and areas of possible improvement. Customer Service: Call Center Operations: Call Center reporting Sample management reports including call center scorecard Coverage of call center activities by report metrics of analysis of call center metrics for trends, patterns, issue identification, etc. 2015 Fannie Mae STAR Reference Guide Page 59 of 111

7.1.3 General Servicing > Customer Service Assessment: Call monitoring Servicers should monitor calls with the objective of achieving and maintaining complete, accurate, and timely records of all calls. It is a leading practice to make an audio recording of all calls. Customer Service: Call Center Operations: Call monitoring Reports detailing call center telephone monitoring and their frequency Call monitoring scorecard Internal quality standards or goals of analysis of call monitoring to achieve and maintain the call center quality standards established by the servicer of remediation and feedback to call agents and follow-up after analyzing call monitoring results Evaluation and Recommendations Call center performance standards are established and maintained. Automatic generation of daily call center reports. Frequency call center scorecard and management reports are refreshed. Call center reports include a balanced set of data on call center performance, such as metrics on call volume, staff/load balancing, call type and repeat caller analysis, staff training and evaluation, and customer satisfaction. Call center scorecard should include: Interactive Voice Response (IVR)) usage, total calls offered, average speed to answer (ASA), abandonment rate percentage (AR%), average handle time (AHT) and blockage rate. In addition, the call center scorecard should include internal thresholds for key metrics with variances. Exceptions are monitored and tracked in management reports for timely resolution and improvements to the process. Relationships between performance metrics and customer satisfaction are analyzed to improve performance. Call Monitoring Volume and frequency of monitored calls are adequate. Identified deficiencies are used by management and provided to customer service agents to improve performance. 2015 Fannie Mae STAR Reference Guide Page 60 of 111

7.1.3 General Servicing > Customer Service CSF: 7.1.3.2 Call Center Demand-Capacity Management and Balancing: Assess and respond to changes in call volume and capacity Servicers need to effectively monitor and assess call volumes in real time to determine call patterns and proactively manage changes in demand. In addition, servicers need to monitor and assess the impact of call volumes on staffing levels. Voice Response Units (VRU) or Automated Call Distribution Systems (ACD), allow customers to obtain information without speaking to customer service representatives. Assessment: Call volume and workforce management Customer Service: Call Center Demand-Capacity Management and Balancing: Call volume and workforce management Sample call volume reports used by management Analysis of call volume changes and record of steps taken by management to balance capacity in response to such changes Analysis carried out by management on the effectiveness of VRU/IVR Description of technology and applications, including versions in production, for real-time call volume management of prioritization and/or call routing logic of analysis to identify borrower language segments and needs Open and close time for customer service call queues by day of the week Internal performance goals or standards on first call resolution rates of analysis and use of call resolution information to manage and improve the call center of incentive programs for customer service agents Documents describing staffing model required inputs and report outputs Process describing use of the model to drive staffing decisions and analysis Documentation for validating / normalizing the model 2015 Fannie Mae STAR Reference Guide Page 61 of 111

7.1.3 General Servicing > Customer Service Evaluation and Recommendations Fannie Mae evaluates servicer s integrated call center system. Determination is made of adequacy and frequency of capacity and demand reports. Call center metrics remain within Fannie Mae Servicing Guide thresholds. VRU and ACD systems are used effectively to meet call demands. If the servicer operates multiple call centers, call volumes are dynamically load balanced across all locations. Well-trained resources are available and equipped to support overflow. Customer Service staff is trained in Fair Debt Collection Practices Act (FDCPA) requirements. Non-English speaking borrowers are offered alternative communication vehicles. Incentive plans are in place and incentive plan drivers align to departmental performance goals. Servicer is available to receive inbound customer service calls, at minimum, during standard banking hours (8 a.m. to 5 p.m.) Monday through Friday for all times zones in which they service loans. It is a best practice to be open after standard banking hours and at least one weekend day. A Staffing Model is established and maintained, and used to drive staffing needs per interval and recruitment when staff volume does not meet projected or measured needs: Considers open positions, absenteeism, holidays, training, productivity by position, demand fluctuations, and planned programs. Frequently updated to keep current and accurate. 2015 Fannie Mae STAR Reference Guide Page 62 of 111

7.1.3 General Servicing > Customer Service CSF: 7.1.3.3 Customer Satisfaction: Establish an effective process for assessing and maintaining customer satisfaction. Assessment: Customer satisfaction surveys Servicers should periodically and continually administer surveys to assess customer satisfaction with call center quality and performance. Customer Service: Customer Satisfaction: Customer satisfaction surveys Sample customer satisfaction surveys and related information Description of customer satisfaction program including delivery methods and frequency of surveys Analysis of customer satisfaction survey results and customer feedback of using customer satisfaction survey results to identify and remediate call center challenges Assessment: Written communication Servicers should have procedures to consistently handle written correspondence (e.g., email, letters) from borrowers. Responses should be consistent and reviewed by management when required. Written communications from borrowers should be responded to promptly. Customer Service: Customer Satisfaction: Written communication Reports identifying written correspondence receipt and completion dates Summary report of written correspondence by type of borrower inquiry / request Evaluation and Recommendations Customer satisfaction surveys are conducted using a wide range of media, including mail, telephone and the Internet. Improvements are driven by survey results, tying call agent incentives and objectives to achieving targeted levels of customer satisfaction. Most recent customer satisfaction surveys and trending analysis show high levels of customer satisfaction and validate that the servicer is maintaining or improving performance. Servicer has processes for handling and tracking written customer inquiries. 2015 Fannie Mae STAR Reference Guide Page 63 of 111

7.1.3 General Servicing > Customer Service CSF: 7.1.3.4 Escalations: Responding promptly to written borrower questions and requests and monitoring and tracking of escalations and complaints. Assessment: Escalations management A complaint or dispute from the borrower, the borrower s trusted advisor, housing counselor, federal agency or elected official that rises to the level of an escalated case should be handled through escalation procedures that determine the involvement of supervisors or lead representatives. Customer Service: Escalations: Escalations management of a process in place to track and address escalations Reports identifying issues requiring escalation and their resolution Frequency of reporting on escalations and resolutions Summary report of escalations including volume, type and prior period status Evaluation and Recommendations Escalation policies, procedures and performance standards, such as resolution times, are well established and practiced consistently. Efficient handoffs to Loss Mitigation are particularly important. Identified deficiencies are used by management and provided to customer service agents to improve performance. Type of escalation is analyzed to determine trends; changes to processes are made to address common issues. Escalation resolution is managed timely. Reporting is in place to manage escalations. Staff managing escalated cases must be: Independent from the staff who handled the initial evaluation decision on the borrower s request for assistance Trained, knowledgeable, and accessible 2015 Fannie Mae STAR Reference Guide Page 64 of 111

7.1.4 General Servicing > Investor Relationship Management 7.1.4 Investor Relationship Management CSF: 7.1.4.1 Partnership and Cooperation in New Initiatives: Responding to Fannie Mae s request in a timely manner at all levels of the organization Assessment: Engagement and participation in new initiatives and products Fannie Mae makes both routine and special requests to servicers to provide data, reports, staff, and support resources. If the request is information related, it must be accurate and timely. If the request is for staff, the servicer is required to make qualified personnel available within expected timelines. Investor Relationship Management: Partnership and Cooperation: Engagement and participation in new initiatives and products List of Fannie Mae requests and their status. Requests include directives, policy changes, audit requests and formal requests for data Interviews with Portfolio Manager(s) related to responsiveness, timeliness, and completeness of servicer responses Interviews with SQR and other personnel who interact with the servicer on a regular basis Interview with servicer staff leading Fannie Mae initiatives Fannie Mae internal reporting on servicer s timely implementation of directives, policy changes, audit requests and formal requests for data 2015 Fannie Mae STAR Reference Guide Page 65 of 111

7.1.4 General Servicing > Investor Relationship Management Assessment: Compensatory fees, penalties and indemnification payment management Fannie Mae uses and relies on information reported by servicers to understand loan status and performance. In some scenarios, Fannie Mae will assess compensatory fees when a servicer does not manage key processes or reporting accurately. Servicers are responsible for managing compensatory fees assessed which includes timely payment or initiation of the rebuttal process. Investor Relationship Management: Partnership and Cooperation: Compensatory fees, penalties and indemnification payment management Internal Fannie Mae compensatory fee and indemnification payment tracking reports Evaluation and Recommendations Accurate, complete and timely implementation of directives, policy changes, audit requests and formal requests for data is reviewed. Tracking mechanisms are in place to identify and manage Fannie Mae requests and policy or program implementation requirements and directives. Cooperation with Fannie Mae Portfolio Manager(s) and review teams. Servicers often assign a single point of contact for coordinating work for Fannie Mae visits. Degree to which the servicer participates in new Fannie Mae initiatives is determined by examining rate of participation, timeliness of responses, and the qualifications and levels of staff assigned to Fannie Mae initiatives. Compensatory fees, penalties and indemnification payments Tracking mechanisms are in place for tracking of outstanding compensatory fees, penalties and indemnification payments due to Fannie Mae. Timely payment of bills and cooperation with Fannie Mae personnel when disputing fees. 2015 Fannie Mae STAR Reference Guide Page 66 of 111

7.1.4 General Servicing > Investor Relationship Management CSF: 7.1.4.2 Review Finding Results and Remediation: Address review findings and results in a timely manner Assessment: Completeness, timeliness and resolution of review findings and action plans Investor Relationship Management: Review Finding Results and Remediation: Completeness, timeliness and resolution of review findings and action plans List of Fannie Mae requests and their status Interviews with Portfolio Manager(s) Interviews with SQR and other personnel who interact with the servicer on a regular basis Action plans to address STAR and SQR issues Evaluation and Recommendations Degree to which the servicer addresses outstanding issues, as identified by Fannie Mae, is evaluated by examining key factors: Total number of findings Timeliness of resolution for all SQR and STAR findings Soundness of approach and effectiveness of solutions as determined by action plans, remediation documents and the frequency of findings cited as a repeat finding in a subsequent review Quality of communication with Fannie Mae on the resolution of action plans Personnel are optimized to address outstanding issues. Assign well-qualified personnel to coordinate activities before, during, and after the assessment Assign a single point of contact for effective and efficient communication and coordination Processes are in place to evaluate issues and implement solutions. Conduct root cause analyses and implement preventive actions and detective mechanisms. Minimize human execution errors by integrating systems with workflow. Test new control measures to gauge the effectiveness of the solution. Fully document the changes and train appropriate staff. Submit remediation documentation in a timely manner to Fannie Mae for clearing the finding. Communication is consistent within the organization and between servicer and Fannie Mae. Set the tone at the top by having senior management participate in both the kickoff and exit review meetings. Documentation is provided by the servicer to meet Fannie Mae s request. Communicate progress and issues that may jeopardize timely resolution of findings to Fannie Mae. 2015 Fannie Mae STAR Reference Guide Page 67 of 111

7.1.4 General Servicing > Investor Relationship Management CSF: 7.1.4.3 Fannie Mae Data Requests: Provide timely, complete, and accurate data to Fannie Mae Assessment: Timeliness, completeness, and accuracy of servicer-provided data Servicers will be accountable for delivering complete, accurate files, within the Fannie Mae established timelines, and on the first submission. Servicers must provide a complete file based on the criteria for each file scored. Servicers must meet or exceed standards for data accuracy and validity as defined by Fannie Mae. Servicers are required to meet Fannie Mae s established timelines by delivering new data streams or incorporating data updates, correcting data quality errors as identified by Fannie Mae, and providing files by established due dates. Investor Relationship Management: Fannie Mae Data Requests: Timeliness, completeness, and accuracy of servicer-provided data Process documentation for handling Fannie Mae data requests Interviews with Fannie Mae Portfolio Manager(s) Interviews with Fannie Mae Data Acquisition and Integration teams Fannie Mae reporting on servicer timeliness, completeness and accuracy Evaluation and Recommendations Accurate, complete and timely submission of data: Assign well-qualified personnel to handle all Fannie Mae data requests. Internal data quality review process meets or exceeds the review process established by Fannie Mae. Perform a quality review on all data prior to distribution to Fannie Mae. Respond promptly to Fannie Mae regarding data that does not meet minimum quality criteria. Establish policy and procedure documents for producing data requests and addressing data quality concerns. Establish criteria for internal data quality and exception reports. 2015 Fannie Mae STAR Reference Guide Page 68 of 111

7.1.5 General Servicing > Vendor Management 7.1.5 Vendor Management Servicers often use third-party vendors to provide services and products that support its business and financial strategies. It is critical that third-party relationships are managed in accordance with internal policies that affect operational, financial and regulatory risks. Servicers should perform an initial risk assessment to determine whether or not to enter into a vendor relationship. Servicers should have processes in place to effectively select and manage vendors used across all servicing functions. Effective vendor management also includes ensuring that knowledge of the outsourced process(es) is maintained in-house. Standardized practices should be in place to create a consistent approach to selecting a vendor and monitoring vendor activities. CSF: 7.1.5.1 Vendor Selection: Vendor selection is an important part of an organization s operations and generally begins with conducting a thorough analysis of business requirements, scope, level of need, timeline, budget, and benefit analysis. Vendors are generally selected based on predetermined factors which can include ability, reputation, financial health, cost, scope of service, and location. Assessment: Process for vendor selection Due diligence should be performed prior to selecting a vendor, to assess qualitative and quantitative aspects of potential vendors and to determine if a relationship will achieve the strategic and financial goals, and mitigate identified risks. Comprehensive due diligence involves a review of all relevant information about a potential vendor, focusing on the entity s financial condition, costs of service, specific relevant experience, knowledge of applicable laws, regulations, and Fannie Mae requirements, its Business Continuity Plan, reputation, and the scope and effectiveness of its operations and controls. Once a vendor is selected, a contract should be negotiated and established which defines basic service agreements (service level agreements, operating level agreements, and other contractual relationships) and each party s roles and responsibilities. In addition, appropriate actions and remedies should be established within the contract to ensure timely action to address and resolve any vendor performance failures. Vendor Management: Vendor Selection: Process for vendor selection Sample vendor training materials Vendor selection policies and procedures Sample vendor Service Level Agreements (SLA) Due diligence checklist for vendor selection 2015 Fannie Mae STAR Reference Guide Page 69 of 111

7.1.5 General Servicing > Vendor Management Evaluation and Recommendations Documented policies and procedures must be in place to ensure consistency for vendor selection across the organization. These procedures should include the following provisions. Vendors to have adequate business continuity plans in place. All vendors to have the ability to meet servicer and Fannie Mae requirements relative to the work being performed. Use of other parties or subcontractors by the vendor. Adequacy of management information systems. Well-established processes are in place for performing due diligence on potential and current vendor qualifications, expertise, cost of service, capacity, reputation, complaints, information security, document custody practices, financial viability, staffing levels, performance, and work quality. SLAs in place which clearly define performance measures, turnaround times, expectations, escalations and use of third party or subcontractors. CSF: 7.1.5.2 Vendor Management and Oversight: Vendor management is a discipline that enables organizations to control costs, drive service excellence, and mitigate risks to gain increased value from their vendors throughout the life of the relationship. Assessment: Management and oversight of vendors As part of ongoing monitoring, servicers should continuously evaluate the vendor's compliance with service level expectations and conduct an annual performance evaluation. To do this effectively, servicers should retain knowledge of the outsourced processes in-house. In addition, servicers should consider whether the financial condition of the vendor has changed and confirm that the vendor s disaster recovery plan remains adequate and updated to accommodate operational changes that may have occurred. Servicers should ensure their disaster recovery plan includes protocols in the event of an operational failure for vendors used. Servicers must show that they are managing vendor relationships and holding vendors accountable to the everchanging regulatory and compliance guidelines. The proactive management of ongoing vendor relationships ensures that any contractual deficiencies are identified and escalated to the appropriate level to ensure prompt resolution of issues. Vendor Management: Vendor Management and Oversight: Management and oversight of vendors Sample checklist for oversight and compliance of vendors Vendor review schedule including frequency Sample vendor scorecard Vendor oversight policies and procedures 2015 Fannie Mae STAR Reference Guide Page 70 of 111

7.1.5 General Servicing > Vendor Management Assessment: Vendor communication A consistent schedule for communication between servicers and vendors is a dependable way to ensure objectives are met, regulatory changes are addressed, and key stakeholders are aware of updates and strategy shifts. Regularly scheduled meetings allow the vendors, as well as the servicer, to share information and discuss performance in terms of service level expectations. Communication should be established with internal business partners to convey contractual activities, gather information about ongoing contractual requirements, and assist in identifying any vendor performance issues. There should be frequent written communication, in the form of email, reports, and letters, as well as verbal communications, in the form of scheduled meetings and conference calls. In addition, it is a best practice to require the vendor to submit formal, written reports on key dates throughout the contract term. Vendor Management: Vendor Management and Oversight: Vendor communication Sample meeting minutes templates Sample documents or communication used to correspond with the vendors and internal groups Policies and procedures detailing the vendor escalation process when in breach of SLA Documentation describing vendor communication process including the frequency of updates Evaluation and Recommendations Effective processes are in place for managing the risks of vendor relationships including: Reviewing the policies, procedures and training documents for the vendor. Customer complaint tracking for vendor services. Language is included in contracts with vendor to address performance expectations and consequences. Taking action if vendors underperform, possibly including terminating the relationship. Ensuring knowledge of the outsourced processes is retained in-house. 2015 Fannie Mae STAR Reference Guide Page 71 of 111

7.1.5 General Servicing > Vendor Management A servicer must have a strong internal vendor management program to ensure vendors are managed to operational and performance risks. Vendor management and oversight includes: Vendor management office and executive oversight. Quality control functions that conduct assessments over the completeness and accuracy of processes performed. Clearly documented policies and procedures which outline the roles and responsibilities for business units and the vendor management office for managing vendors. Continuous improvement resources and process implementation team. Outside surveillance and audit support. Internal quality assurance audits and compliance resources. New technology and tools. Robust scorecard capabilities. Change management team and process. Business continuity plans which include vendor failure contingency plans. Effective service relationship management also includes the following activities: Clarifying expectations and documenting them in service agreements. Preparing for a new service. Monitoring results. To determine if the vendor is performing as expected, it is a good practice to meet with the business that uses the vendor, frequently review the vendor scorecards, and validate that the data is accurate. At a minimum, annual performance reviews are conducted to assess service level agreements. Monthly review of vendor timeliness, competence, completeness and performance relative to servicer levels is established. 2015 Fannie Mae STAR Reference Guide Page 72 of 111

7.2 Collections and Loss Mitigation 7.2 Collections and Loss Mitigation Collections is the effective use of outreach, communication, assessment, counseling and resolution techniques to improve the credit performance of loans, particularly in the early stages of the delinquency cycle. Loss Mitigation involves assessing delinquent borrowers financial ability and desire to remain in their homes and avoid foreclosure. Minimizing credit loss by matching appropriate retention and liquidation options with the borrowers financial capability is the main objective of servicers. Process Area Critical Success Factor Assessment Area 7.2.1 Collections 7.2.2 Loss Mitigation 7.2.1.1 Borrower Outreach 7.2.1.2 Workforce Management 7.2.1.3 Call Handling and Reporting 7.2.1.4 Borrower Assessment and Counseling 7.2.2.1 Single Point of Contact and Workforce Management 7.2.2.2 Borrower Solicitation 7.2.2.3 Counseling and Decisioning Tools Campaign prioritization Effective campaign strategies Staffing Model Employee incentive plans Demand capacity management and balancing Call monitoring Call center reporting Counseling and decisioning tools Use of counseling agencies Pipeline monitoring exception management Ownership model Workforce management Solicitation of retention and liquidation solutions Retention counseling and decisioning tools Liquidation counseling and decisioning tools Pipeline monitoring and exception management 2015 Fannie Mae STAR Reference Guide Page 73 of 111

7.2 Collections and Loss Mitigation Introduction The Collections and Loss Mitigation section of the STAR Reference Guide details delinquency resolution activities segmented by the Process Areas and Critical Success Factors in which the respective tasks are generally performed within a mortgage servicing organization. The STAR Program Office understands that each servicer has a unique organizational structure; however for the purpose of the STAR Program, each task is assessed within the associated Process Area and Critical Success Factor. The primary objectives of a servicer s collections operation are first to reach delinquent borrowers and then to use established methods to resolve delinquencies whenever possible. Successful outreach and resolution activities employ a multifaceted contact strategy, the tactical use of technology and analytics, internal staff expertise, as well as use of approved counseling agencies. Servicers must have a defined regimen of measuring and fine-tuning all of these key collection activities to achieve desired results. Servicers are expected to use automation and prioritization tools, data analytics, and behavioral scoring models. Delinquent borrower contact rates may be maximized by the use of additional outreach methods including email, text messaging, and other forms of alternative methods, such as face-to-face contact. Once contact is made, the collection staff needs to accurately assess the borrower s intent and financial situation. An effective collections staff performs basic triage and counseling to direct the borrower into either a home retention solution or foreclosure alternative. When collection efforts are insufficient to cure delinquent loans, servicers must have a well-trained staff capable of effectively deploying Fannie Mae s loss mitigation solutions. A good loss mitigation operation has a single point of contact responsible for interfacing with the borrower, adequate staffing, and technology tools that support rapid decision making and execution of all loss mitigation solutions. In addition, precise, regular measurement of staff and workout option performance is critical for quality servicing. Effective loss mitigation specialists quickly and accurately assess a borrower s financial hardship to determine the optimal solution. In addition to the counseling and documentation duties of collectors, loss mitigation specialists must also secure and analyze borrowers financial documents and borrowers intentions regarding the property. Loss mitigation specialists must have effective negotiating skills to engage and motivate borrowers to participate in the solution. Finally, loss mitigation operations must deliver the solutions quickly but in a controlled environment. 2015 Fannie Mae STAR Reference Guide Page 74 of 111

7.2 Collections and Loss Mitigation Process Level Profile The STAR Program requires Organizational and Shared Process information related to the various functions under scope. The focus of Organizational information is on scale, complexity, and broader environmental factors while that of Shared Processes is on people, process, and technology dimensions. Applications used to support the processes, the extent of automation / integration between the various modules and the maturity of control procedures are reviewed. People management practices are also reviewed. This requires servicers to provide key metrics identified in the following table and supporting documentation. Specific focus areas for required data include performance metrics and staffing information used across all critical success factors within the Collections and Loss Mitigation section of the guide. Organizational Overview # of geographic locations Outsourced functions Key vendor relationships Hours of operation Description of organization structure including span of control Applications 7.2 Collections and Loss Mitigation: Process Level Profile Collections applications Dialer Customer contact management Payment tools (e.g., Western Union, Quick Connect, etc.) Degree of module integration and # of manual workarounds Borrower facing website Tools used to support outreach programs Behavioral scoring model Predictive analytics Call scripts Skip tracing Other Loss Mitigation applications Workflow management Imaging, document management Decisioning rules engine Degree of module integration and number of manual workarounds, including spreadsheets People Recruitment & retention # of open positions Fill times Experience o Staff o Supervisors o Managers Turnover rates o Staff o Supervisors o Managers Capacity management Work load o # of loans per line employee o Supervisor to staff ratio o # of managers Skills assessment practiced Training # of hours of training # of hours of Fannie Mae related training # of hours of collections training # of hours of loss mitigation training Counseling / decisioning skills training Compliance training Training material availability Counseling training on Fannie Mae guidelines # of FDCPA certified collectors 2015 Fannie Mae STAR Reference Guide Page 75 of 111

7.2 Collections and Loss Mitigation Collections Metrics* 7.2 Collections and Loss Mitigation: Process Level Profile (continued) Outbound efficiency Penetration ratio Skip tracking ratio Total call offered Total calls answered Total FTE agents Loss Mitigation Metrics* Average hours working call queues Average speed to answer Abandonment rate Total abandoned calls Average handle time Blockage rate % of calls sampled (monitored) for quality # of calls monitored per agent per month % of agents monitored each month Success rate of repayment plans Current to worse roll rate 30 to worse roll rate Transition to 60+ rate 30 to better roll rate # of Single Point of Contact (SPOC) FTE # of Retention FTE # of Liquidation FTE # cases monitored for documentation quality per agent per month % of cases monitored for documentation quality Retention efficiency ratio Modification conversion rate non-hamp Retention solution timing 12-Monthmodification performance 60+ to Cure 60 to Worse Roll Rate 90+ to Worse Roll Rate Modification conversion rate HAMP * Metric details are available in the STAR SCM Performance Metric dictionary 90+ to Better Roll Rate Average days from closed to first modification payment due date Average days from modification first trial payment due date to modification closed date Liquidation efficiency ratio Liquidation solution timing 2015 Fannie Mae STAR Reference Guide Page 76 of 111

7.2.1 Collections 7.2.1 Collections CSF: 7.2.1.1 Borrower Outreach: Establish contact with the delinquent borrower using various communication media and support tools. Manage operations to identify borrowers who have the highest risk of default and the greatest likelihood of benefiting from early intervention. The deployment of appropriate technologies, tracking effectiveness of specific strategies, and managing quality standards is critical to reducing delinquencies. Assessment: Campaign prioritization Prioritization tools, such as behavioral scoring models, and predictive analytics, when integrated effectively with outreach policies, improve results. Effective outreach policies may involve prioritizing calls to borrowers with unsuccessful prior attempts and escalating calls to borrowers who break a promise to pay agreement. Collections: Borrower Outreach: Campaign Prioritization Description documents on the behavioral scoring model or predictive analytics tool used by the servicer Servicer analysis on model effectiveness Work prioritization policy documents including methodology used (e.g., product, age of delinquency, geography, single point of contact, investor, risk) Assessment: Effective campaign strategies The telephone remains the most commonly used outreach vehicle; however, for a more effective outreach strategy, servicers should also use other communication media, such as letters, website, and emails. When these measures prove ineffective in contacting certain borrowers, servicers should leverage alternative methods, such as face-to-face contact and skip tracing, and track the effectiveness of these methods. The basic call campaign measures indicate a servicer's ability to track metrics and effectiveness in handling call campaigns. An advanced servicer should be able to decompose portfolios into risk tiers, apply differing treatment strategies and measure penetration in each tier. Collections: Borrower Outreach: Effective Campaign Strategies Outreach campaign calendar Documents describing outreach campaign strategy Sample late notices Skip tracing policies and procedures 2015 Fannie Mae STAR Reference Guide Page 77 of 111

7.2.1 Collections Evaluation and Recommendations Measurements are in place to target outreach campaigns to the greatest impact. Statistical and numerical models are used to strategically identify potential delinquent (or higher risk) borrowers and prioritize outreach campaigns. Many servicers augment these models with best time to call analytics to maximize contact rates. Outreach campaign strategy is documented and ensures all eligible loans are targeted. Established outreach campaign calendar is in place and is reviewed frequently by management. A combination of outreach methods and measures are used. Late notices provide clear information on the borrower s requirements to cure default and offer alternative methods to communicate with the servicer. Notices are distributed in a timely manner to all eligible population. Late notices are reviewed annually for clarity and content. Skip tracing is conducted when delinquent borrowers cannot be located following a predefined number of attempts or immediately upon determining invalid contact information. CSF: 7.2.1.2 Workforce Management: Manage staffing levels to support collections activities (e.g., inbound and outbound calls) and align incentives for collection employees to drive behaviors and outcomes. Servicers need to effectively monitor and assess call volumes in real time to determine call patterns and proactively manage changes in demand. In addition, servicers should monitor and assess the impact of call volumes on staffing levels. Collections employees should be incented to meet or exceed individual and departmental goals. Assessment: Staffing Models Staffing models should be used to identify skill sets and resources needed to meet personnel requirements and are used to drive recruitment and training programs. Collections: Workforce Management: Staffing Models Documents describing staffing model required inputs and report outputs Process describing use of the model to drive staffing decisions and analysis Documentation for validating / normalizing the model 2015 Fannie Mae STAR Reference Guide Page 78 of 111

7.2.1 Collections Assessment: Employee incentive plans Collections employees should be financially incented to meet or exceed individual and departmental goals. The scope of participation and amount of payout should be significant enough to positively affect behaviors. Collections: Workforce Management: Employee incentive plans Collections incentive program description including frequency of payouts and performance and quality drivers Evaluation and Recommendations A Staffing Model is established and maintained, and used to drive recruitment and training programs. Considers open positions, absenteeism, holidays, training, productivity by position, demand fluctuations, and planned programs. Frequently updated to be current and accurate. The scope, type and structure of the Collections incentive program are aligned with investor goals. Collectors are financially incented on individual and departmental performance including quality of work. Incentive program drivers align with both the servicer and Fannie Mae goals. The scope of participation is significant enough to affect behavior. CSF: 7.2.1.3 Call Handling and Reporting: Manage inbound and outbound call volumes. Perform call monitoring to ensure adherence with internal quality standards and service level expectations. Reporting and tracking in place to monitor call center activities. Assessment: Demand capacity management and balancing Servicers need to monitor key call center metrics to effectively manage call center operations and call center staffing. Collections: Call Handling: Demand capacity management and balancing Documents describing escalation process regarding key call center metrics 2015 Fannie Mae STAR Reference Guide Page 79 of 111

7.2.1 Collections Assessment: Call monitoring Collections: Call Handling: Call monitoring Reports detailing call center telephone monitoring and their frequency Call monitoring scorecard Internal quality standards or goals of analysis of call monitoring to achieve and maintain the call center quality standards established by the servicer of remediation including feedback to call agents and borrower follow-up after analyzing call monitoring results Assessment: Call center reporting Standard call center reporting allows the servicer to consistently monitor call center activities. Agent and department level call center scorecards provide insight into call center and agent performance relative to benchmarks. Month-over-month historical reports that include key metrics (Average Speed to Answer, Abandonment Rate Percentage, and First Call Resolution) allow management to identify and track changes in trends and measure servicer levels. Using management reports to monitor call center performance is necessary to ensure timely resolution of issues to meet borrower and investor satisfaction. Collections: Collections Reporting: Call Center reporting Sample call center management reports and scorecard Sample agent level report and scorecard Vendor performance scorecard, if applicable Evaluation and Recommendations Call handling procedures include: Escalation processes to manage key inbound call center metrics when thresholds are not met. Performance of key metrics aligns with Servicing Alignment Initiative (SAI). 2015 Fannie Mae STAR Reference Guide Page 80 of 111

7.2.1 Collections Call Monitoring: Volume and frequency of monitored calls are adequate. Identified deficiencies are used by management and provided to collections agents to improve performance. All calls are recorded and archived for at least one year. Call monitoring scorecard incorporates recommended items from Know Your Options Customer Care (KYOCC) Call Quality Scorecard Call center reports are in place to measure call center performance at the department and agent level. Scorecards consist of a balanced set of metrics that are updated frequently. Leading servicers assign a management group or compliance team to review key metrics or gap reports on a regular basis. Scorecards include performance indicators and variance to set benchmarks. Call center staff has visibility into performance indicators throughout the day. Call center trend reporting is produced monthly, at a minimum, to effectively manage performance. CSF: 7.2.1.4 Borrower Assessment and Counseling: Assess the borrower s willingness and ability to successfully cure the delinquency. Establish performance measures and track decisioning effectiveness. Once borrower contact is made, collection agents need to accurately assess the borrower s financial situation and intent to retain the property. The use of rules-based decisioning tools and checklists ensures all necessary information is collected and the best option for resolution is provided to the borrower. Assessment: Counseling and decisioning tools The collection agent determines the borrower s intent to stay in the home and his or her willingness and ability to successfully cure the delinquency. Inherent in this decision is the assessment and review of the borrower s ability and commitment to make future payments when due. Collectors must be equipped with the right set of tools and training to quickly gather, update, and assess borrower data. The collector must also thoroughly educate the borrower on all available solutions and gain the borrower s commitment for resolution. In addition, servicers must maintain accurate records of borrower contact in their systems. Collections: Borrower Assessment and Counseling: Counseling and decisioning tools Documents describing the tools and models Sample counseling scripts System demonstrations Financial analysis tools used to assess a borrower Servicer interview 2015 Fannie Mae STAR Reference Guide Page 81 of 111

7.2.1 Collections Assessment: Use of counseling agencies To increase the effectiveness of counseling, servicers can partner with third party credit counseling agencies. These counseling agencies provide a communication channel and educational information regarding alternate payment options and other debt management strategies. To continually assess effectiveness, servicers should measure performance of loans where the borrower received credit counseling. Collections: Borrower Assessment and Counseling: Use of counseling agencies Credit counseling referral tracking report List of contracted credit counseling agencies Servicer interview Assessment: Collections pipeline monitoring and exception management Payment plans with borrowers should be tracked for collection effectiveness and continuous improvement. Counseling effectiveness can be gauged by roll rates, success rates of promises to pay and outcomes for repayment plans, and referrals to loss mitigation. Collections: Delinquency Resolution: Execution of collection strategies Repayment plan tracking reports Loss mitigation referral tracking reports Roll rate tracking reports Evaluation and Recommendations Training and tools that align with Fannie Mae goals are in place for collectors. Collectors receive counseling and negotiation training and related tools to perform their jobs effectively. Leading servicers train collectors on the entire loan delinquency cycle and develop abilities to recognize outcomes beyond repayment options, such as modification, Mortgage Release, short sale, and foreclosure. In addition, well-trained employees collect required financial documents early in the process for validation. Web portals provide an efficient means to collect and store documents. Collection personnel are empowered and trained to identify loss mitigation opportunities and can perform basic loss mitigation (e.g., HAMP pre-qualification, repayment plans) without transferring the borrower. 2015 Fannie Mae STAR Reference Guide Page 82 of 111

7.2.1 Collections Servicer staff understands the relationship between collection and loss mitigation and collection agents possess competencies in both areas. This is accomplished by cross-training employees. Staff has a holistic understanding of the entire delinquency lifecycle and can therefore make higher quality loan assessments, providing the homeowner with effective workout requirements and plans, and explaining resolution options and decisions. Collectors are trained to recognize certain words, such as vacant, listed for sale, and don t want to remain in house, that indicate triggers for alternative actions. Call scripts and / or decision trees are used to guide collecting agents in their conversations with the delinquent borrower. Appropriate identification and hand-off processes are in place to trigger referrals to loss mitigation and other departments in a timely manner. Leading servicers frequently use warm transfers from collections to loss mitigation for more effective follow through with the right party at the time of contact. Effective use of credit counseling agencies Servicer tracks and responds to counseling agency referrals in a timely manner. Contracted counseling agencies work as partners with the servicer to provide expanded geographic coverage, particularly for face-to-face interactions. Servicer s track record of providing effective solutions as measured by the success or failure of repayment plans and loss mitigation referrals is examined. Servicers should monitor roll rates to measure their ability to manage delinquency performance and prevent future defaults. 2015 Fannie Mae STAR Reference Guide Page 83 of 111

7.2.2 Loss Mitigation 7.2.2 Loss Mitigation CSF: 7.2.2.1 Single Point of Contact and Workforce Management: Using an ownership model, more specifically SPOC, provides the servicer the ability to counsel and negotiate the most appropriate solution for the borrower with one dedicated contact. The ownership model ensures the servicer s ability to provide updates on the status of any request for foreclosure prevention alternatives and more effectively move the borrower through the default prevention process to resolution. Servicers need to effectively monitor and assess loss mitigation performance to determine appropriate staffing needs to meet both servicer and investor production goals. Servicers should have monetary incentive plans in place to incent loss mitigation employees to meet or exceed individual and departmental goals Assessment: Ownership model Servicers should use a SPOC ownership model throughout the delinquency lifecycle. Loss Mitigation: Single Point of Contact and Workforce Management: Ownership model Documents describing ownership model including structure, scope of responsibility, key handoffs and ownership model referral triggers Documents describing staffing model required inputs and report outputs, level of automation and type of tool used Process documentation describing staffing model use to drive staffing decisions Documentation for validating / normalizing the model Evaluation and Recommendations Servicer uses an Ownership Model: Delinquent borrowers are assigned a SPOC with which all interaction with the servicer is handled. The assignment of a SPOC is based on a meaningful driver. The SPOC should be able to efficiently discuss all appropriate retention and liquidation options available to the borrower. Assessment: Workforce Management: Servicers should monitor and assess the impact of loan portfolio changes to ensure adequate staffing. Staffing models should use historical trends and seasonality to forecast staffing needs and drive recruitment efforts. The scope of participation and amount of payout for incentive plans should be significant enough to positively affect behaviors. The work of staff who directly contribute to outcomes of interest to Fannie Mae should be measured with incentives tied to results. 2015 Fannie Mae STAR Reference Guide Page 84 of 111

7.2.2 Loss Mitigation Loss Mitigation: Single Point of Contact and Workforce Management: Workforce management Documents describing staffing model required inputs and report outputs, level of automation and type of tool used Process describing model used to drive staffing decisions and analysis Documentation for validating / normalizing the model Loss Mitigation incentive program description, including performance and quality drivers Evaluation and Recommendations A Staffing Model is established and maintained by the servicer, and used to drive recruitment and training programs: The model considers open positions, absenteeism, holidays, training, productivity by position, demand fluctuations, and planned programs. The model is automated based on historical volumes and variations. A centralized tool is used to collect all historical and actual information and forecast demand. The model is frequently updated to keep current and accurate. The scope, type and structure of the loss mitigation incentive program are aligned with investor goals. Loss mitigation specialists are financially incented on individual and departmental performance including quality of work. Incentive program drivers align with both servicer and Fannie Mae goals. The scope of participation is significant enough to affect behavior. 2015 Fannie Mae STAR Reference Guide Page 85 of 111

7.2.2 Loss Mitigation CSF: 7.2.2.3 Borrower Solicitation: Servicers should proactively solicit borrowers for loss mitigation solutions in all stages of delinquency. Assessment: Solicitation of retention and liquidation solutions Tracking and measuring borrower responses to loss mitigation solicitations improves the servicer s ability to identify successful campaigns and correspondence as well as measure the pull through rates associated with the solicitations. Loss Mitigation: Borrower Solicitation: Solicitation of retention and liquidation solutions Key letters used for borrower outreach Description of modification solicitation campaign logic and exclusions Borrower response package tracking reports Description documents on process and milestones for distribution of borrower outreach letters Evaluation and Recommendations Servicer has a documented process for conducting borrower solicitation using a variety of outreach methods. Tracking reports are used to monitor solicitation efforts. Solicitation tracking reports are in place to measure effectiveness of borrower outreach campaigns. Quality control processes are in place to ensure all eligible loans receive borrower response packages. Servicer has exception reports to track loans not in compliance with servicer or Fannie Mae solicitation requirements. Servicer has tools in place to identify loans eligible for Fannie Mae foreclosure prevention options Servicer proactively identifies loans eligible for Streamlined Modification prior to day 90 and continues solicitation efforts throughout the borrower s delinquency. 2015 Fannie Mae STAR Reference Guide Page 86 of 111

7.2.2 Loss Mitigation CSF: 7.2.2.4 Counseling and Decisioning Tools: Assess borrower s situation to ascertain and counsel borrowers to appropriate loss mitigation option. Once borrower contact is made, loss mitigation specialists need to accurately assess the financial situation and the borrower s intent to retain the property. Servicers must deploy appropriate tools and provide necessary training to their loss mitigation specialists. Some of these tools include checklists that ensure all necessary information is collected, and decision tools, such as a net present value (NPV) calculator. Assessment: Retention counseling and decisioning tools The loss mitigation specialist determines the borrower s intent to retain the home and his or her willingness and ability to successfully cure the delinquency. Inherent in this decision is the assessment and review of the borrower s ability and commitment to make future payments when due. The loss mitigation specialist also must thoroughly educate the borrower on all available solutions as well as consequences associated with inaction or failure to perform and gain the borrower s agreement for curing the account. Loss mitigation specialists must be equipped with the right set of tools (e.g., checklists and rules-based decisioning tools) to quickly gather and update borrower data, and assess the borrower's financial situation. Decisioning tools, along with the Fannie Mae workout hierarchy and delegation of authority (if applicable), should include all delinquency resolution options and ensure the Fannie Mae decisioning waterfall is followed. Servicers should also have processes to proactively identify modification candidates. Servicers must track completeness and accuracy of documentation to support resolution decision. Loss Mitigation: Counseling and Decisioning Tools: Retention counseling and decisioning tools Documents describing counseling training provided to loss mitigation employees, including a list of all counseling training offered Sample call scripts used for loss mitigation solution counseling Documents describing the tools and decision logic System demonstrations Servicer interview Loss Mitigation Workout Report Case Documentation 2015 Fannie Mae STAR Reference Guide Page 87 of 111

7.2.2 Loss Mitigation Assessment: Liquidation counseling and decisioning tools Once the loss mitigation specialist determines a retention solution is not appropriate, the loss mitigation specialist determines the borrower s willingness and ability to successfully complete a short sale or Mortgage Release. The loss mitigation specialist should have the necessary tools and scripts to provide the borrower a seamless transition from retention to a liquidation solution discussion. Loss mitigation specialists must be equipped with the right set of tools (e.g., checklists and rules-based decisioning tools) to quickly gather and update borrower and property data to assess the best solution for the borrower. Decisioning tools, along with the Fannie Mae workout hierarchy and delegation of authority (if applicable), should use property value and loan data to determine the appropriate listing price and acceptable net proceeds needed to successfully consider a short sale solution. If a short sale is not feasible, a Mortgage Release should be promptly assessed. Servicers must track completeness and accuracy of documentation to support resolution decision. Loss Mitigation: Counseling and Decisioning Tools: Liquidation counseling and decisioning tools List and description of counseling training Sample counseling scripts Documents describing the tools and decision logic Short sale and Mortgage Release process maps Document describing the process for obtaining a property s value System demonstrations Servicer interview Loss Mitigation Workout Report Case Documentation Evaluation and Recommendations Loss mitigation specialists are equipped with processes and support tools to assess borrowers' circumstances. Effectiveness of counseling is measured in part by workout case volume and workout closing percentages. To make counseling more effective, servicers that demonstrate best practices provide loss mitigation specialists with extensive counseling training. In addition, training needs to equip loss mitigation staff with the full understanding of the delinquency lifecycle. Servicer actively engages borrowers in pre- and post-modification counseling. Comprehensive decisioning tools, including list price guidance, are used to guide both the borrower and the loss mitigation specialist. The quality of decisioning tools is gauged in part by usage and feedback from loss mitigation specialists. Servicer has processes to offer and evaluate loss mitigation alternatives throughout the delinquency lifecycle. Servicer leverages Fannie Mae-provided tools and resources (e.g., KYOCC, Servicing Management Default Underwriter (SMDU), Post Modification Counseling, etc.) 2015 Fannie Mae STAR Reference Guide Page 88 of 111

7.2.2 Loss Mitigation Documentation is accurate and used to improve the process. Loss mitigation case records substantiate documentation accuracy and completeness. Loan reviews and re-default rates are used to evaluate the appropriateness and timeliness of workout solutions offered. Assessment: Pipeline monitoring and exception management The servicer s loss mitigation efforts must be aligned to Fannie Mae guidelines and goals. Servicers must maintain acceptable levels of workout efficiency and effectiveness based on the portfolio size and, more specifically, based on the volume of delinquent loans serviced. The loss mitigation benefit for loss mitigation solutions is closely related to timing of delivery of the solution and also post-conversion performance of the modification. Once a servicer establishes contact and identifies the need for a loss mitigation solution, the servicer must have controls to actively monitor progression through the stages of document collection, underwriting, and fulfillment. If progress lags behind the established timeline for a particular loss mitigation path, the servicer must deploy appropriate exception handling routines. Efficient management of the loss mitigation solution pipeline is critical to maintaining high levels of borrower satisfaction while meeting various Fannie Mae program requirements. To ensure these objectives are met consistently, the servicer needs to control input, monitor and track cases, and manage exceptions. Loss Mitigation: Counseling and Decisioning Tools: Pipeline monitoring and exception management: Loss mitigation solutions performance scorecard Sample tracking report Sample pipeline reports Sample exception reports Exception handling process documentation Servicer Interview Fannie Mae servicer SDQ exception reports 2015 Fannie Mae STAR Reference Guide Page 89 of 111

7.2.2 Loss Mitigation Evaluation and Recommendations Servicer has a documented process in place to monitor the timely delivery of loss mitigation solutions. Servicer should have a performance scorecard and tracking reports in place to measure performance relative to internal and investor benchmarks. Scorecards consist of solution efficiency drivers that are frequently updated. Leading servicers assign a management group or compliance team to review key benchmarks or gap reports on a regular basis. Scorecards include performance indicators and variance to set benchmarks. Loss mitigation staff has visibility into performance indicators throughout the day. Status reporting is produced daily, at a minimum, to effectively manage performance. Reports are used to track trial payments and status to ensure timely modification conversions. Have a clearly defined workflow with automated triggers and appropriate support tools for efficient case management. Eligibility criteria for opening a case are clearly defined. Support tools, such as checklists, are widely available or embedded in workflow. Approval roles and delegations are clearly defined, and systematically driven. Documents can be easily accessed and are indexed in a centralized repository, permitting caseload sharing where appropriate and necessary. Proactively manage the loss mitigation pipeline. Provide Loss Mitigation staff with adequate training and job aids, such as eligibility or documentation checklists, to facilitate the advancement of loans through the loss mitigation steps. Provide borrowers with clear instructions on their responsibilities and a single point of contact from inception to resolution of the case. Create a sense of urgency with each interaction. Provide borrowers with multiple mechanisms to return required information and check status including web portal, email, pre-paid overnight delivery, and facsimile. Employ a variety of mechanisms to follow up on stalled loss mitigation cases, such as Last Chance Letters, alternative call times, and face-to-face contact / document chasing. Document clear guidance for loss mitigation specialists around exit criteria such as number of failed attempts to contact a borrower regarding missing documentation and ensure the protocols are well defined and followed. Proactively and promptly move cases from retention to liquidation when retention options have been exhausted. Set increasingly aggressive targets for pull through rates and time to complete key milestone steps in the loss mitigation process for work teams and loss mitigation specialists. Ensure mechanisms are in place to track exceptions by work team or individual and by step of the loss mitigation process. 2015 Fannie Mae STAR Reference Guide Page 90 of 111

7.2.2 Loss Mitigation Servicer must review and remediate SDQ loans that are in a non-performing loss mitigation workout. 2015 Fannie Mae STAR Reference Guide Page 91 of 111

7.3 Default Management 7.3 Default Management Effective Default Management processes are essential for mitigating risk, reducing costs, and maintaining performance. Default management includes the servicers processes, abilities, and competencies to handle bankruptcy, foreclosure, and post-foreclosure accounts. Additionally, these established processes ensure the servicers manage performance expectations in compliance with Fannie Mae guidelines, and that they remain in compliance with Fannie Mae, statutory, and regulatory requirements. Process Area Critical Success Factor Assessment Area Bankruptcy case opening and servicer system 7.3.1.1 update Case Initiation Proof of Claim filing and case review Managing key bankruptcy milestones and timelines 7.3.1 Bankruptcy 7.3.1.2 Timeline Management and Reporting Adherence to Fannie Mae bankruptcy referral guidelines Foreclosure prevention opportunities Adherence to payment plans or other 7.3.1.3 arrangements Process Management Managing post-discharged Chapter 7 loans Pre-referral to foreclosure review on loans 7.3.2.1 Foreclosure Initiation determined eligible for foreclosure Timeliness, completeness and accuracy of referral package 7.3.2 Adherence to Fannie Mae foreclosure timelines Foreclosure 7.3.2.2 and reporting requirements Timeline Management and Reporting Monitoring attorney performance 7.3.2.3 Process Management Pre-foreclosure sale management and oversight Attorney management 7.3.3.1 Properly maintain property condition through inspection, preservation and maintenance 7.3.3 Property Preservation and Post Foreclosure Management Preserving, Protecting and Maintaining Fannie Mae Collateral 7.3.3.2 Post Foreclosure Review 7.3.3.3 Title Exceptions Fannie Mae guidelines for REOgrams are always met Servicer elimination/rescission notifications Conveyance of clear and marketable title to Fannie Mae 2015 Fannie Mae STAR Reference Guide Page 92 of 111

7.3 Default Management Introduction Default Management encompasses management and oversight of bankruptcy, foreclosure, and postforeclosure activities. Servicers are responsible for establishing thorough processes and procedures for monitoring and resolving bankruptcy cases, which include but are not limited to monitoring bankruptcy filings and initiating appropriate servicer processes, managing and monitoring the bankruptcy attorney's performance, timeline performance and cure rates, and providing foreclosure prevention activities, where applicable. The servicer is responsible for providing a complete referral package to the bankruptcy attorney, any additional documentation, information, or signatures the bankruptcy attorney requests, and for fulfilling all of its other servicing obligations. Fannie Mae requires its servicers to perform all necessary steps to ensure that foreclosure proceedings are conducted appropriately. Foreclosure processes and procedures vary by jurisdiction. In many states, foreclosures have become complex and require attorneys who are adept at understanding and assimilating dynamic legal processes. Servicers must use attorneys that meet Fannie Mae s minimum requirements to execute the foreclosure process. Servicers are expected to maintain frequent and high quality communication with foreclosure attorneys, and have the necessary processes and oversight functions to ensure required foreclosure timelines and legal expense guidelines are met. Servicers are expected to follow certain procedures after foreclosure. Following a foreclosure, the servicer notifies Fannie Mae of the foreclosure by sending a REOgram, which initiates post-sale activities. Fannie Mae then takes steps to prepare the Real Estate Owned (REO) property for sale. Although the marketing and sale of the REO unit is conducted by Fannie Mae, the servicer is responsible for promptly notifying Fannie Mae of foreclosure completion, conveying clear and marketable title, maintaining the Homeowner s Association (HOA) dues and property taxes, and preserving the property until conveyance to Fannie Mae. Collectively, these steps help limit timelines and contain costs associated with the acquisition and disposition of REO properties. 2015 Fannie Mae STAR Reference Guide Page 93 of 111

7.3 Default Management Process Level Profile The STAR Program requires Organizational and Shared Process information related to the various functions under scope. The focus of Organizational information is on scale, complexity, and broader environmental factors while that of Shared Processes is on people, process and technology dimensions. Applications used to support the processes, the extent of automation / integration between the various modules and the maturity of control procedures are reviewed. People management practices are also reviewed. This requires servicers to provide key metrics identified in the following table and supporting documentation. Specific focus areas for required data include performance metrics and staffing information used across all critical success factors within the Default Management section of the guide. Default Management Level Profile Organizational Overview # of geographic locations Outsourced functions Key vendor relationships Description of organizational structure, including span of control Applications and Environment Major applications and services used for default management Degree of module integration and # of manual workarounds Controls documentation People General background Recruitment & Retention # FTEs # open positions Average # of years of o FTE mortgage experience o Staff o Part time o Supervisors Fill times o Managers Turnover rates for past 12 months Average # of years of o Staff default management o Supervisors experience o Managers o Staff o Supervisors o Managers Staffing model in place Bankruptcy Required Data* # of new bankruptcy notifications received # of total bankruptcy cases initiated # of Proofs of Claim filed for all chapters # of Proofs of Claim filed timely % of Proofs of Claim filed timely Average days between closing order and removal from bankruptcy status Average days in bankruptcy chapter 7 Average days in bankruptcy chapter 13 % of Motions for Relief referrals submitted timely to attorney # of delinquent loans without referral for all bankruptcy chapters exceeding Fannie Mae referral guidelines % of bankruptcy loans with full contractual payments in unapplied funds Bankruptcy no LPI movement Capacity Management Work load o # of files o # of supervisors o # of managers Skills assessment practiced Training # hours of training # hours of Fannie Mae related training # hours of bankruptcy training # hours of foreclosure training Compliance training # of loans for all bankruptcy chapters with full contractual payments in unapplied funds in payment aging buckets # of each workout type completed per month for loans in bankruptcy Average age of referral 2015 Fannie Mae STAR Reference Guide Page 94 of 111

7.3 Default Management Foreclosure Required Data* Average days from LPI to foreclosure referral by state Referral date to foreclosure sale by state % of sales held inventory Pull-through rate Default Management Level Profile (continued) 180+ days delinquent no referral Scheduled sales to foreclosure inventory Sales held to foreclosure inventory Missing documents to inventory Foreclosure holds to inventory Beyond Time Frame Resolution Average Age of Loans Beyond Allowable Foreclosure Time Frame Property Preservation and Post Foreclosure Management Required Data* # of total REOgrams for the period # of REOgrams completed within timelines % of REOgrams submitted within timelines Average REO notification reporting time # of servicer elimination/recession notification exceptions # of servicer elimination/recession notifications % of servicer elimination notification exceptions # of title exceptions % of title exceptions # of HOA title issues # of tax-related title issues * Metric details are available in the STAR SCM Performance Metric dictionary # of foreclosure deed title exceptions Average days to complete foreclosure deed title issues Foreclosure deeds resolved < 45 days Average days to complete seller not in title issues Seller not in title issues resolved <45 days 2015 Fannie Mae STAR Reference Guide Page 95 of 111

7.3.1 Default Management> Bankruptcy 7.3.1 Bankruptcy CSF: 7.3.1.1 Case Initiation: Ensure processes are in place to update the servicer s system and notify affected departments on new bankruptcy filings, as well as confirming all initial key milestones are met. Servicers must have processes and written procedures to control and monitor bankruptcy proceedings effectively. These processes and procedures must cover bankruptcies filed under Chapters 7, 11, 12, and 13 of the Bankruptcy Code. Assessment: Bankruptcy case opening and servicer system update The servicer should have processes and procedures to monitor bankruptcy proceedings. When a borrower files, the case status must be entered into the tracking system and shared with other affected departments. This ensures timely notifications so debt collection efforts can be suspended and the servicer can maintain individual case files for each mortgage loan involved in a bankruptcy proceeding. Bankruptcy: Case Initiation: Bankruptcy case opening and servicer system update Checklist or documentation of steps to review and confirm bankruptcy information and any prior bankruptcy filings Sample new bankruptcy filing and exceptions reports (i.e., case initiation delays, title issue tracking and delay reports, cash management reports) Documentation of quality control procedures for the bankruptcy initiation process, including suspension of debt collection efforts 2015 Fannie Mae STAR Reference Guide Page 96 of 111

7.3.1 Default Management > Bankruptcy Assessment: Proof of Claim filing and case review To protect Fannie Mae s assets, servicers must file Proofs of Claim in accordance with local requirements. As a matter of practice, servicers should file Proofs of Claim as soon as possible, but no later than deadlines established by the courts. For escrowed loans, servicers should also ensure that an accurate and timely escrow analysis is completed and provided to all appropriate parties. For Chapters 12 and 13, the escrow analysis should reflect properly in the borrower s post-petition payments. Servicers must obtain and review the case docket and any proposed reorganization plan prior to the confirmation hearing and any deadline to object to confirmation. The review should address: Modifications to the security deed or mortgage or terms of the promissory note Determination of asset/no-asset case Correct arrearage amounts and payments of interest (provided that it is permissible in the filing district) Arrearage claims filed in a reasonable period of time in accordance with local rules and practices, as applicable First post-petition payment due dates, as applicable Filings that occurred in a conduit district, as applicable Inclusion of attorney fees, where applicable Bankruptcy: Case Initiation: Proof of Claim Filing and case review Documentation of Proof of Claim preparation and filing process Sample checklist for reorganization plan or case reviews including objection or cramdown criteria Management exception reports Documentation of quality control procedures in place for plan review and proof of claim preparation 2015 Fannie Mae STAR Reference Guide Page 97 of 111

7.3.1 Default Management > Bankruptcy Evaluation and Recommendations Servicers must proactively monitor bankruptcy filings and obtain updated case information and documentation. Procedures are implemented to proactively monitor bankruptcy filings to identify bankruptcies at the time they are filed by the borrowers. These procedures must include verification of the debtor s interest in the property and assessment of bad faith filings. Case status tracking is established in the servicer s system. To prepare all personnel to adequately address new bankruptcy filings, the servicer must implement procedures that ensure key milestones are met. Timely notifications to all internal and external departments involved with a bankruptcy are completed and documented. All departments affected by the bankruptcy filing take the necessary actions to ensure adequate remedies are pursued, and the servicer s and investors risks are appropriately managed. This includes the immediate cessation of debt collection efforts upon bankruptcy verification. A bankruptcy case file is established and maintained in accordance with the Fannie Mae Servicing Guide. Bankruptcy personnel are trained on the differences between Chapters 7, 11, 12, and 13, and how those differences impact the initial case review and bankruptcy milestones. Additionally, bankruptcy personnel review and address risks, including but not limited to cramdowns and bad faith filings. Checklists or decision trees are used to assist bankruptcy personnel in reviewing bankruptcy cases and reorganization plans. Claims and escrow analyses are processed accurately and in a timely manner. Management uses reporting to monitor the bankruptcy portfolio and review and address exceptions. Reports are used to determine the number of new bankruptcy filings and identify trends. Exception management reports are reviewed to identify and address process inefficiencies. 2015 Fannie Mae STAR Reference Guide Page 98 of 111

7.3.1 Default Management > Bankruptcy CSF: 7.3.1.2 Timeline Management and Reporting: Maintain an accurate bankruptcy timeline and status tracking system. The STAR Program rates servicers on their ability to efficiently and effectively manage the bankruptcy process. Servicers should implement a system that tracks bankruptcy status to ensure milestones are met within the appropriate timelines. Servicers should have processes that support, facilitate, and monitor bankruptcy attorney inquiries and communication response times with the servicer s bankruptcy function. Continuous bankruptcy attorney and servicer feedback minimizes response turn-around time and bankruptcy processing delays. Servicers must stay compliant with statutory, regulatory and Fannie Mae-driven changes. Assessment: Managing key bankruptcy milestones and timelines Bankruptcy: Timeline Management and Reporting: Managing key bankruptcy milestones and timelines Timeline and bankruptcy exception data on loans in bankruptcy Reports or scorecard to monitor bankruptcy vendor performance including service level agreements Exception reports and procedure to identify and manage loans in defaulted status Reports on bankruptcy accounts with active title issues (i.e. chain of title issues, lack of assignments of mortgage) Documentation of quality control process 2015 Fannie Mae STAR Reference Guide Page 99 of 111

7.3.1 Default Management> Bankruptcy Assessment: Adherence to Fannie Mae bankruptcy referral guidelines When a Motion for Relief referral is appropriate, the servicer must send a complete referral package to the attorney within the timelines established in the Fannie Mae Servicing Guide. The referral package must include all of the legal documents the attorney needs to conduct the bankruptcy proceedings, property inspection, and all necessary information about the status of the property, the borrower, the mortgage loan, and the bankruptcy filing. The servicer also must include all relevant information on the current and any prior bankruptcy filings involving the borrower or the subject property (such as plans, pleadings, schedules, and proofs of claim), foreclosure prevention activities, loan collection history, any previous (or current) foreclosure status information, and all information the servicer has regarding the value of the security property (if applicable). Bankruptcy: Timeline Management and Reporting: Adherence to Fannie Mae bankruptcy referral guidelines Copies of current policies and procedures depicting when loans should be referred to bankruptcy attorney Exception reports used to monitor the referral Documentation of quality control procedures for the referral process Assessment: Foreclosure prevention opportunities Given the increased importance of foreclosure prevention in connection with bankruptcy filings, the servicer's bankruptcy staff must be knowledgeable about Fannie Mae's overall foreclosure prevention practices. In each bankruptcy case, servicers must consider forbearance, a repayment plan, modification, Mortgage Release, or short sale. In addition, the servicer s bankruptcy monitoring process must include procedures to identify foreclosure prevention opportunities, and the servicer and the bankruptcy attorney must work together to pursue these opportunities during all phases of the bankruptcy process. Bankruptcy: Timeline Management and Reporting: Foreclosure prevention opportunities Reports on bankruptcy loans tracking the prevention measures taken before referring to foreclosure Policies and procedures on foreclosure prevention efforts for loans in bankruptcy 2015 Fannie Mae STAR Reference Guide Page 100 of 111

7.3.1 Default Management> Bankruptcy Evaluation and Recommendations Servicer must efficiently and effectively manage the bankruptcy process. Bankruptcy loans do not exceed estimated/required bankruptcy timelines within each major milestone. Use state-specific referral checklists to ensure status reports are complete, timely, and accurate. Referral packages contain all required documentation and are sent within the timeframes established in the Fannie Mae Servicing Guide. To ensure the servicer complies with the guidelines, effective exception handling procedures should be in place. Servicers must: Generate frequent, automatic and comprehensive management reports on all bankruptcy cases. Implement procedures to address, in a timely manner, bankruptcy cases which do not meet Fannie Mae guidelines. Servicer must review and remediate SDQ loans that are in Bankruptcy Chapter 7 or Chapter 13 with no LPI (Last Paid Installment) movement for a defined time period. Monitor bankruptcy payments and take appropriate and timely action when payments are missed. Monitor bankruptcy dockets to determine updated bankruptcy status and take necessary actions. Ensure Fannie Mae bankruptcy delinquency status codes are reported accurately. Servicers should continually train and coach staff on new foreclosure prevention initiatives. Training guides and resources should be available for reference by employees. Periodic audits should be conducted for quality assurance. Policies and procedures should be continually updated to reflect current foreclosure prevention initiatives. Policies and procedures should be available to all employees for reference and guidance. Routine audits should be conducted to ensure policies and procedures are up to date. Adequate controls are in place to ensure borrower solicitation packages are centralized and monitored for loans in bankruptcy. 2015 Fannie Mae STAR Reference Guide Page 101 of 111

7.3.1 Default Management> Bankruptcy CSF: 7.3.1.3 Process Management: Provide accurate and timely cash management, as well as ensuring effective post-closing servicing occurs. Throughout the life of the bankruptcy, servicers should implement a system and processes to continuously monitor pre- and post-petition status and payments for Chapters 11, 12, and 13 bankruptcies, as well as tracking the status and contractual payments for Chapter 7 bankruptcies, and ensure timely Motion for Relief processes are followed. Proper payment status reporting is vital to identify contractual or post-petition defaulted loans. Servicers must also have procedures to verify bankruptcy laws are adhered to regarding the servicing of Chapter 7 post-discharge loans. Assessment: Adherence to payment plans or other arrangements The servicer must retain and maintain accurate records of the payments (contractual, pre-petition, and postpetition) it receives from the debtor or trustee, before, during, and after the bankruptcy process to ensure that payments are applied in a timely manner and are properly accounted for, in accordance with Fannie Mae's standard servicing requirements, the debtor's contractual obligations, and the rules of the bankruptcy court. The servicer must keep the bankruptcy attorney informed about the debtor's payment record. Bankruptcy :Process Management: Adherence to payment plans or other arrangements Reports on bankruptcy loans detailing their contractual or post-petition status Cash management reports showing total funds and time in suspense for all bankruptcy chapters Cash management exception reports showing number of loans in bankruptcy with full contractual payments in suspense Examples of pre/post-petition and adequate protection order tracking systems used to determine the account status Policies and procedures detailing bankruptcy cash management processes and requirements 2015 Fannie Mae STAR Reference Guide Page 102 of 111

7.3.1 Default Management> Bankruptcy Assessment: Managing post-discharged Chapter 7 loans Case completion for a Chapter 7 bankruptcy proceeding is defined as the termination of the automatic stay, the case being dismissed or closed, or when the borrower receives a discharge and the trustee abandons all interest in the secured property. Although the servicer may not attempt to collect on the debt from the borrower personally once a discharge is received, the servicer should still pursue the applicable foreclosure prevention alternatives if the loan is delinquent. In situations where retention options are implemented with borrowers who received a Chapter 7 discharge but have not reaffirmed the mortgage debt, servicers must ensure they follow Fannie Mae guidelines to make clear they are not seeking to collect the debt as a personal liability of the borrowers. Bankruptcy: Process Management: Managing post-discharged Chapter 7 loans Polices outlining current processes regarding treatment of Chapter 7 post-discharge Documentation of processes for handling foreclosure prevention alternatives on Chapter 7 postdischarged and non-reaffirmed loans Quality assurance reports Reports on Chapter 7 post-bankruptcy loan Evaluation and Recommendations Servicers must monitor post-petition status throughout the life of the plan to determine if and when an account defaults. Upon default, the servicer must take appropriate action to seek relief from the bankruptcy stay. Routine monthly audits of post-petition status for all active bankruptcies. Routine audits of unapplied partial balances to ensure funds are applied in a timely manner. Unapplied funds could result in an account being mistakenly reported as being in default. To ensure court orders are adhered to regarding the posting of incoming funds throughout the bankruptcy, servicers must have systems capable of tracking incoming funds, as well as designating whether these funds are for post-petition payments or pre-petition arrears. Post- and pre-petition funds should be tracked separately. Upon discharge of all bankruptcies with plan payments, an audit should be conducted to ensure all funds received were accurately applied. Clear treatment of Chapter 7 post-discharge accounts should be outlined in servicer s policies and procedures. Policies and procedures should be updated immediately in the event of any regulatory change. Documentation of handling foreclosure prevention alternatives for Chapter 7 post-discharged and non-reaffirmed loans. Training regarding the proper handling of Chapter 7 post-discharge loans should be provided to employees who service these accounts. 2015 Fannie Mae STAR Reference Guide Page 103 of 111

7.3.1 Default Management> Bankruptcy Routine audits should be performed to ensure treatment of Chapter 7 post-discharge loans are being handled in a manner consistent with federal bankruptcy law. Updated reports of Chapter 7 post-discharge loans should be maintained to track status and ensure proper handling. Alternatively, the account should be clearly marked as a Chapter 7 post-discharge loan in the servicer s systems. 2015 Fannie Mae STAR Reference Guide Page 104 of 111

7.3.2 Default Management > Foreclosure 7.3.2 Foreclosure CSF: 7.3.2.1 Foreclosure Initiation: Ensure loans are appropriately reviewed prior to initiating foreclosure, foreclosure is initiated in a timely manner and the completeness and accuracy of referral packages sent to the foreclosure attorneys. Assessment: Pre-referral to foreclosure review on loans determined eligible for foreclosure Servicers must conduct a pre-referral to foreclosure review within the requirements and timeframe established by the Fannie Mae Servicing Guide. The servicer must confirm the breach letter expiration and the Borrower Solicitation Package deadline expiration without affirmative response from the borrower. Foreclosure: Foreclosure Initiation: Pre-referral to foreclosure review on loans determined eligible for foreclosure Documentation of pre-referral to foreclosure review process Sample checklists used to review loan eligibility for foreclosure Exception reports used to track loans in the pre-referral to foreclosure review process Assessment: Timeliness, completeness and accuracy of the foreclosure referral package Servicers must provide the foreclosure attorney with a complete and accurate foreclosure referral package in a timely manner, and work with the attorney to determine the documents required in the particular jurisdiction. Currently, servicers are required to provide all appropriate documentation and mortgage loan status data for each case that is referred to a foreclosure attorney in adherence with Fannie Mae Servicing Guide requirements. Additionally, servicers must respond to requests from attorneys for additional information or documents within the Fannie Mae guideline timeframes. Foreclosure: Foreclosure Initiation: Timeliness, completeness and accuracy of the foreclosure referral package Sample foreclosure referral package checklist Documentation of the foreclosure referral process Documentation of the process for preparing and executing any foreclosure documents needed for the referral Referral matrix or documented processes providing the required documents to initiate foreclosure for each state Sample exception reports used to ensure complete and accurate referral packages were sent to the foreclosure attorney 2015 Fannie Mae STAR Reference Guide Page 105 of 111

7.3.2 Default Management > Foreclosure Evaluation and Recommendations A pre-referral to foreclosure process should be in place to ensure loans are appropriately reviewed for foreclosure eligibility. Maintain a pre-referral to foreclosure review process that is in compliance with statutory, regulatory, and Fannie Mae requirements. Perform routine audits on files approved for foreclosure initiation to ensure accuracy and timeliness. Foreclosure referral packages sent to the attorneys should contain all the necessary documents needed to initiate the foreclosure in adherence to statutory and investor requirements. Implement a referral checklist or matrix to show documents needed to initiate foreclosure for each state. Conduct regular audits to ensure referral packages contain the correct documentation. CSF: 7.3.2.2 Timeline Management and Reporting: Maintain an accurate foreclosure timeline and status tracking system as well as all related foreclosure documentation. Servicers should implement a system that tracks foreclosure status to expected timelines. The STAR Program rates servicers on their ability to efficiently and effectively manage foreclosure timelines. Assessment: Adherence to Fannie Mae foreclosure timelines and reporting requirements Foreclosure timelines for each state are published by Fannie Mae on www.fanniemae.com. Foreclosure: Timeline Management and Reporting: Adherence to Fannie Mae foreclosure timelines and reporting requirements Reports on foreclosure loans that do not meet Fannie Mae guidelines Reports tracking aged title exceptions and curative title action Assessment: Monitoring attorney performance Foreclosure: Timeline Management and Reporting: Monitoring attorney performance Methodology or tracking tools exist to ensure workload balancing between attorneys Sample vendor performance scorecards including service level agreements 2015 Fannie Mae STAR Reference Guide Page 106 of 111

7.3.2 Default Management > Foreclosure Evaluation and Recommendations Servicer must efficiently and effectively manage foreclosure timelines. Foreclosure loans do not exceed estimated/required foreclosure timelines within each major milestone. Conduct routine audits of selected attorneys to ensure accurate and timely processing of foreclosure events. To ensure the servicer complies with the guidelines, effective exception handling procedures should be in place. Generate frequent, automatic, and comprehensive management reports on all foreclosure cases. Reports should address issues such as holds, postponements, missing documents, and any other issues that impede timely progression of the foreclosure process. Servicer is expected to meet all Fannie Mae foreclosure timeline guidelines. When a title issue is identified, servicers should work to take immediate and curative action, in order to prevent delays and interruptions in foreclosure timelines. Servicers should have vendor performance scorecards in place to monitor timelines and service level expectations. Servicer should have established service level agreements with vendors which detail performance level expectations and consequences when service level agreements are not met. CSF: 7.3.2.3 Process Management: Servicers have processes that support, facilitate, and monitor foreclosure attorney inquiries and communication response times with the servicer's foreclosure function. Continuous foreclosure attorney and servicer feedback minimizes response turn-around time and foreclosure delays. Servicers must have written policies and procedures requiring a review of delinquent mortgage loan files prior to the scheduled foreclosure sale within Fannie Mae guidelines. Servicers must review the mortgage loan history to verify compliance with all required delinquency management requirements, and that no approved payment arrangement or foreclosure prevention alternative offers are pending or accepted. If the servicers find that all required delinquency management requirements have not been met or an approved payment arrangement or foreclosure prevention alternative offer is still pending, the servicers must fulfill the delinquency management requirements or resolve outstanding offers prior to the foreclosure certification date. 2015 Fannie Mae STAR Reference Guide Page 107 of 111

7.3.2 Default Management > Foreclosure Assessment: Pre-foreclosure sale management and oversight Foreclosure: Process Management: Pre-foreclosure sale management and oversight Documentation of the process for preparing and executing any foreclosure documents needed during the foreclosure process Procedures and checklists used for pre-foreclosure sale review Sample procedures and checklists to verify that state, federal, and required mediation options and foreclosure prevention initiatives have been addressed prior to completion and finalization of foreclosure Exception Reports to identify loans in which state, federal, and required mediation options and foreclosure prevention initiatives have not been addressed prior to completion and finalization of foreclosure Documentation for handling holds, postponements and cancellations Assessment: Attorney management Foreclosure: Process Management: Attorney management Sample of communication between foreclosure attorney and servicer foreclosure department, addressing attorney inquiries and communication feedback, follow up and response times with the servicer foreclosure area Documentation of processes for attorney fees and costs review and approval Exception reports for attorney fees and costs not meeting allowable thresholds Evaluation and Recommendations Servicers must efficiently and effectively manage the foreclosure process. Develop procedures for preparing and executing foreclosure-related documents required during the foreclosure process. This includes defining the appropriate levels of authority for document execution, timeframe for execution, and a quality control process. Implement procedures to effectively manage holds, postponements and cancellations. Servicers must review and approve all attorney fees and costs to ensure they are compliant with Fannie Mae guidelines on services performed, maximum allowable attorney fees and costs, and the excess fee request process. Prior to approving attorney fees and costs, servicers must ensure all foreclosure services are performed in accordance with applicable law and professional standards. Conduct regular audits on foreclosure fees and costs, and excess fee requests submitted by attorneys to ensure compliance with Fannie Mae guidelines. 2015 Fannie Mae STAR Reference Guide Page 108 of 111

7.3.3 Default Management > Property Preservation and Post Foreclosure Management 7.3.3 Property Preservation and Post Foreclosure Management CSF: 7.3.3.1 Preserving, Protecting and Maintaining Fannie Mae Collateral: Perform regular ongoing property inspections, maintenance and preservation. The servicer must manage the property until it is conveyed to the insurer or guarantor or until Fannie Mae assigns that responsibility elsewhere. The servicer must take whatever action is necessary to protect the value of the property. This includes making sure that no apparent violations of applicable law occur on the property (such as violations of laws relating to illegal narcotics and similar substances) and that the property is protected against vandals and the elements. Servicers must cancel hazard insurance coverage within 14 days of appearing on the vacancy report located on HomeTracker. Assessment: Properly maintain property condition through inspection, preservation and maintenance Property Preservation and Post Foreclosure Management: Preserving, Protecting and Maintaining Fannie Mae Collateral: Properly maintain property condition through inspection, preservation and maintenance Fannie Mae exception reports Documentation of property inspection and preservation processes Documentation of post-foreclosure sale hazard insurance processes Sample checklist/matrix for seasonal preservation requirements (e.g., grass cuts, winterization, etc.) Sample exception reports for property inspection and preservation Sample reports used for managing code violations Vendor scorecards for outsourced property preservation, property inspection and hazard claim functions, if applicable Evaluation and Recommendations Proper procedures should be in place for managing property inspections, property preservation and postforeclosure hazard insurance. In addition, servicers should have processes to control the volume of code violations at the time of conveyance and the number of unresolved issues involving property conditions. Maintain the REO property s condition and appearance. This includes securing the property, mowing the grass, removing trash and other debris, and winterizing the property, etc. Maintain property condition in accordance with applicable laws and repair items that pose a health or safety hazard. Manage the REO property until it is conveyed to the insurer or guarantor or until Fannie Mae assigns that responsibility elsewhere. Take additional actions necessary to protect the value of the property. Vacant properties should be secured by changing exterior locks, securing all windows and exterior doors, repairing fences, and otherwise securing potentially dangerous areas and related facilities. Properties should not be boarded unless absolutely necessary to prevent vandalism or to secure the property, or where required by law. 2015 Fannie Mae STAR Reference Guide Page 109 of 111

7.3.3 Default Management > Property Preservation and Post Foreclosure Management Documentation for hazard insurance processes include claim filing, change of risk letters, use of Fannie Mae s form 176 when applicable, and report used to track outstanding hazard insurance claims and disbursements. Property preservations exception reports include, but are not limited to, inspections not completed, late inspections, over allowable bids, and denied over allowable bids due to servicing violation. CSF: 7.3.3.2 Post Foreclosure Review: Notify Fannie Mae of completed foreclosures in a timely and accurate fashion. Assessment: Fannie Mae guidelines for REOgrams are always met Servicers are required to submit REOgrams within 24 hours following foreclosure sale or Mortgage Release recorded in accordance with Fannie Mae guidelines. The servicer should also ensure that the information provided in the REOgram is complete and accurate. Property Preservation and Post Foreclosure Management: Post Foreclosure Review: Fannie Mae guidelines for REOgrams are always met Servicer provided REOgram information to Fannie Mae on all REO cases for the reporting period Documentation of procedures used to manage REOgram submissions Fannie Mae provided exception reports Assessment: Servicer elimination/rescission notifications When an issue is identified by the servicer or Fannie Mae that requires the elimination of a REOgram, Fannie Mae guidelines require servicers to send a Servicer Elimination/Rescission Notification in timely manner. Upon elimination/rescission of the sale, the servicer is responsible for transferring title into the appropriate party s name and removing Fannie Mae from title. The servicer must initiate any required steps to restore title to the appropriate party within Fannie Mae established timeframes. In addition, the servicer must adhere to specific local and state law recordation timeframe requirements, as applicable. Property Preservation and Post Foreclosure Management: Post Foreclosure Review: Servicer elimination/rescission notifications Fannie Mae exception reports provide the total number of eliminations/rescissions sent and the number sent outside timelines, from which this percentage is computed. Sample exception reporting to ensure service elimination notifications are completed timely and accurately. Documentation of processes to manage eliminations/rescissions to comply with Fannie Mae guidelines. 2015 Fannie Mae STAR Reference Guide Page 110 of 111

7.3.3 Default Management > Property Preservation and Post Foreclosure Management Evaluation and Recommendations REOgrams should be accurate, complete, and submitted with required information within the 24 hour timeline. Adequate staff and processes should be in place in order to fulfill this goal. Assign dedicated staff to support Fannie Mae s REOgram requirements. Create and maintain a checklist and related control processes to ensure all required information is submitted the first time. If not fully automated, create automated triggers to alert responsible personnel of impending REOgram submissions. For REOgram eliminations/rescissions, servicers are assessed on timely and accurate submission. Assign dedicated staff to handle notifications to fulfill requirements. Implement and maintain a tracking system to ensure required actions are promptly resolved. Conduct regular audits to ensure required REOgram data is submitted in an accurate and timely manner. CSF: 7.3.3.3 Title Exceptions: Clear title to enable property transference Assessment: Conveyance of clear and marketable title to Fannie Mae Title vesting exceptions should be cleared within Fannie Mae established guidelines. If title defects are discovered, the servicer must notify Fannie Mae of the issue(s). Property Preservation and Post Foreclosure Management: Title Exceptions: Conveyance of clear and marketable title to Fannie Mae Sample exception reports for tracking titles issues Provided by Fannie Mae: Exception reports Documentation of processes used to manage title exceptions, including HOA, taxes, foreclosure deed, and vesting. Evaluation and Recommendations Quantity of exceptions and resolution timelines are within stated guidelines. Adequate staff and processes should be in place to fulfill this requirement. Assign dedicated staff to address all exceptions. Maintain procedures for handling title exception escalations. Implement and maintain a tracking system to ensure required actions are promptly followed in every case. 2015 Fannie Mae STAR Reference Guide Page 111 of 111