Freddie Mac is building an array of high-tech tools for its loan servicers, saying greater efficiency and predictive powers on the part of those who administer loans will be critical to its plan to buy more subprime loans.
David W. Glenn, president of the secondary market agency, said systems geared to "proactive" servicing will identify the delinquent loans that need the most attention and help servicers focus their resources on nipping problems in the bud.
Mr. Glenn said automated underwriting has let Freddie price loans on the basis of their risk, making it possible to lend profitably to borrowers with less-than-perfect credit.
The agency, which buys mortgages for its own portfolio or packages them for sale to investors, has opened itself to what Mr. Glenn termed A-minus loans and announced plans to delve into B and C credits.
Mr. Glenn said Freddie's attention to loan scoring systems for both originators and servicers will let it take a more aggressive approach to lower-quality loans than its bigger counterpart, Fannie Mae.
Last year, in an alliance with Mortgage Guaranty Insurance Corp., Freddie Mac introduced Early Indicator, a software program based on statistical models that lets servicers identify which delinquent borrowers are likely to resume payments without special attention and which show a high risk of default.
"The acceptance from servicers is good," said Jericho Trianna, director of collections, nonperforming loans. She noted that it gives servicers a way to rank loans in much the same way that automated underwriting helped originators rank loan prospects. "The acceptance of scoring as the wave of the future is what's driving this."
Separately, Freddie is introducing what it calls "an integrated suite of on-line applications" geared to servicers.
Among the applications is one that helps servicers achieve a higher ranking with Freddie. Based on guidelines for accuracy and efficiency, Freddie ranks servicers in four tiers.
Mr. Glenn said only the top two tiers are likely to qualify to work on subprime loans for the agency.