Freddie Mac’s “Servicing Excellence” initiative will be transforming mortgage servicing by addressing industry challenges and enhancing operational efficiency. Diego Sanchez and Mike Reynolds discuss how this new initiative builds on the legacy of Reimagine Servicing^®, fostering a culture of innovation and accountability. With a focus on sustainable homeownership, the initiative is set to drive change in the industry, benefiting servicers and shaping the future of mortgage servicing over the next 3-5 years.

Raising the bar for servicing standards

“I wanted to challenge ourselves to be even better,” said Mike Reynolds, SVP and Head of Servicing for Freddie Mac Single-Family. “Servicing has become a very attractive business that has drawn in many participants and significant investment.”

With 13.6 million loans under management, Freddie Mac’s role in servicing is crucial. “Even a small percentage of loans going delinquent represents a significant financial impact,” Reynolds said. “That’s why we need to be proactive in managing servicing outcomes and supporting homeowners in distress.”

Building on Reimagine Servicing

The Servicing Excellence initiative builds on Reimagine Servicing, a multi-year effort modernizing Freddie Mac’s servicing technologies. “Reimagine Servicing was a technology campaign launched in 2019 and completed in December 2024,” Reynolds explained. “We accomplished everything we set out to do, but we’re not done investing in servicing.”

Reynolds emphasized that servicing remains a priority for Freddie Mac. “Even though the goals of Reimagine Servicing have been accomplished, that does not mean we’re done improving the space,” he said. “We’re committed to making servicing more efficient and effective for the future.”

Key challenges for servicers

Freddie Mac’s new initiative comes amid economic and housing challenges. “The economy is doing well in some ways, but we’re also seeing mixed signals,” Reynolds said. “Higher-than-expected interest rates are slowing home price appreciation, and homeowners are facing increased costs beyond their mortgage payments.”

These rising costs — including insurance premiums, property taxes, and HOA fees—are placing new pressures on homeowners. “Even if a homeowner has a low locked-in rate, they may be dealing with increasing expenses,” Reynolds said. “We need to be ready to support them when necessary.”

What servicers can expect

Servicing Excellence is focused on four key priorities:

1. Asset management – Enhancing risk management and financial efficiency.

2. Homeowner support – Improving policies and technology to assist homeowners.

3. Servicer partnership – Understanding and addressing the unique needs of different servicers.

4. Freddie Mac team development – Strengthening internal expertise to drive servicing improvements.

“Our commitment is to understand each servicer’s specific needs and make the necessary technology investments to support their business models,” Reynolds said.

Emphasizing early-stage delinquency management

A major focus of Servicing Excellence is early-stage delinquency intervention. “As soon as a loan goes 30 days delinquent, we’re incurring expenses,” Reynolds explained. “The deeper the delinquency, the greater the cost to Freddie Mac and the harder it is to keep the homeowner in their home.”

Freddie Mac encourages servicers to be more proactive in assisting homeowners early on. “We’re saying, ‘Put more effort into early-stage borrower contact efforts,’” Reynolds said. “If a homeowner can get back on track with a payment deferral, let’s do that right away instead of waiting until the situation worsens.”

The future of servicing: Data-driven decisions

Freddie Mac is also working to enhance the data it collects from servicers to gain a better understanding of emerging risks. “Historically, our data collection was more circumscribed,” Reynolds said. “But as technology improves, we have an opportunity to refine our models and strategies and expand the view into our portfolio.”

One key area of focus is tracking homeowners’ rising insurance costs. “We currently have only partial insight into how insurance premiums are affecting homeowners,” Reynolds said. “That’s something we need to address to better predict and respond to financial stress.”

Shaping mortgage servicing for the modern age

Freddie Mac is working to create a more resilient and efficient servicing landscape by setting higher expectations for itself and its servicers.

“We’re not just maintaining the status quo,” Reynolds said. “We’re pushing to make servicing better for everyone — servicers, Freddie Mac, and most importantly, homeowners.”