source:
  type: guide
  id: hud-4000-1-v-c-servicer-tier-ranking-system-ii
  authority: FHA Single Family Housing Policy Handbook 4000.1, Part V — c. Servicer
    Tier Ranking System II (02/16/2021)
  description: FHA Single Family Housing Policy Handbook 4000.1, Part V — c. Servicer
    Tier Ranking System II (02/16/2021).
  coverage_tier: operative
obligations:
- id: hud-4000-1-v-c-servicer-tier-ranking-system-ii-full
  canonical_id: hud-4000-1-v-c-servicer-tier-ranking-system-ii-full
  section: FHA Single Family Housing Policy Handbook 4000.1, Part V — c. Servicer
    Tier Ranking System II (02/16/2021)
  type: do
  tags:
  - regulator-direct
  - fha
  - hud-handbook
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: FHA Single Family Housing Policy Handbook 4000.1, Part V — c. Servicer
      Tier Ranking System II (02/16/2021)
    source_class: hud-handbook
    source_url: https://www.hud.gov/hud-partners/single-family-handbook-4000-1
    snapshot_id: 8c03836f77f317e1
    fetched_at: '2026-05-23T00:28:40Z'
    content_hash: sha256:411430f29b13f9b54a2ebb0e6f6e7087ecd2b90d0da22eb0c8c792eaa2d7d0df
    paragraph_quote: 'c. Servicer Tier Ranking System II (02/16/2021) i. Definition
      The Tier Ranking System (TRS) II is a methodology for quantifying a Mortgagee’s
      performance in complying with HUD’s Loss Mitigation and Delinquent servicing
      policies. ii. Standard TRS II evaluates Mortgagees’ overall performance in Delinquent
      mortgage servicing, based on the following elements: • foreclosure prevention:
      evaluates a Mortgagee’s foreclosure initiation actions, time frames, and intervention
      practices; • Re-Defaults: evaluates and scores the performance of cases after
      a mortgage modification or Partial Claim incentive claim is filed with and processed
      by HUD, or after a non-incentivized modification is reported to HUD; • SFDMS
      reporting: evaluates if a Mortgagee is reporting on all open Defaults and evaluates
      the number of fatal errors committed by the Mortgagee; and V. QUALITY CONTROL,
      OVERSIGHT, AND COMPLIANCE C. Mortgagee Monitoring 2. Institutional Mortgagee
      Monitoring Handbook 4000.1 1721 Last Revised: 11/26/2025 • loss mitigation engagement:
      measures the Mortgagee’s formal and informal loss mitigation engagement and
      indirectly measures early engagement in loss mitigation. See TRS II – Scorecard
      Calculation Methodology – Servicer Narrative for complete instructions. iii.
      Who Will Be Scored (A) Eligibility HUD scores and classifies all Mortgagees
      as a Public Scorer, Public Provisional Scorer or Private Scorer. A Mortgagee
      must have a continual 12 months of performance or is automatically opted out
      for that fiscal year’s scores. In addition, a Mortgagee must meet the criteria
      of either Public Scorer or Public Provisional Scorer to be eligible for increased
      incentives. A Mortgagee who is contemplating and/or anticipating an institution
      level acquisition or merger may contact HUD at answers@hud.gov to discuss scoring
      impacts and ramifications. For more information about transferor and transferee
      responsibilities during an acquisition or merger, see Responsibility for Servicing
      Actions. (1) Public Scorer A Mortgagee will be classified as a Public Scorer
      when the Mortgagee: • is approved to service Single Family Mortgages; • has
      an active approval status; and • is the Servicer of record for a seriously delinquent
      portfolio of more than 25 Mortgages. A Mortgagee classified as a Public Scorer
      has no option to opt out. The Mortgagee’s final fiscal year end score will be
      made available to the public and is eligible for increased incentives associated
      with achieving a Tier 1. (2) Public Provisional Scorer A Mortgagee will be classified
      as a Public Provisional Scorer when the Mortgagee: • is approved to service
      Single Family Mortgages; • has an active approval status; and • is the Servicer
      of record for a seriously delinquent portfolio of between 5 and 25 Mortgages.
      A Mortgagee classified as a Public Provisional Scorer has the option to opt
      out. The Mortgagee’s final fiscal year end score will be made available to the
      public if V. QUALITY CONTROL, OVERSIGHT, AND COMPLIANCE C. Mortgagee Monitoring
      2. Institutional Mortgagee Monitoring Handbook 4000.1 1722 Last Revised: 11/26/2025
      the opt-out option is not exercised and is eligible for increased incentives
      associated with achieving a Tier 1. (3) Private Scorer A Mortgagee will be classified
      as a Private Scorer when the Mortgagee is the Servicer of record for a seriously
      delinquent portfolio of less than five Mortgages. A Mortgagee classified as
      a Private Scorer is automatically opted out. The Mortgagee’s final fiscal year
      end score will not be made available to the public and is not eligible for increased
      incentives associated with achieving a Tier 1. (B) Who Receives the Score Mortgagees
      are scored on specific case performance on four TRS II elements as the Servicer
      of record per HUD''s insurance system when any of the following is triggered:
      • SFDMS reporting: the Mortgagee that is the Servicer of record and is performing
      loss mitigation for the current default episode; • loss mitigation engagement:
      the Mortgagee that executes the Loss Mitigation Option, or files the claim;
      • foreclosure prevention: the Mortgagee that initiates the foreclosure; or •
      Re-Defaults: the Mortgagee that executed the initial Loss Mitigation Option
      prior to the Re-Default. Additional information related to this can also be
      found in the TRS II – Scorecard Calculation Methodology – Servicer Narrative.
      (C) Process to Opt Out The Mortgagee must determine if it qualifies to opt out.
      To request to opt out of scoring, the Mortgagee must submit a request to HUD
      via email to answers@hud.gov, no later than October 31 of each calendar year
      for which the Mortgagee requests to opt out of scoring. The Mortgagee must include
      in the request: • “TRS II Opt Out” in the subject line of their email; and •
      their Mortgagee five-digit ID number. Once HUD verifies the Mortgagee’s status,
      the Mortgagee will receive a confirmation email that the Mortgagee has opted
      out of scoring for the fiscal year. (D) Use of Scores HUD will continue to score
      all Mortgagees. Scores for Public Provisional Mortgagees who have exercised
      the opt-out option and for Private Scorers will be used for informational purposes
      and HUD audits. V. QUALITY CONTROL, OVERSIGHT, AND COMPLIANCE C. Mortgagee Monitoring
      2. Institutional Mortgagee Monitoring Handbook 4000.1 1723 Last Revised: 11/26/2025
      HUD will not make publicly available the scores of Mortgagees who have opted
      out of scoring. iv. Tier Ranking System II Element Calculations Mortgagees may
      calculate their own TRS II scores by following the instructions provided in
      the TRS II – Scorecard Calculation Methodology – Servicer Narrative. v. Extra
      Credit The Mortgagee may receive extra credit added to their final fiscal year
      end score by attending, participating in, and/or completing delinquent servicing
      training pursuant to the attendance and completion requirements in the TRS II
      – Scorecard Calculation Methodology – Servicer Narrative. vi. Scores, Grades,
      and Tiers HUD evaluates each scoring element separately, based on activity for
      each month in the quarter, and then averages the elements for a quarterly score.
      HUD will provide Mortgagees with a TRS II Scorecard each quarter, along with
      a corresponding letter grade and tier ranking. HUD will average quarterly scores
      to produce a final annual fiscal year score and grade. Final Fiscal Score Assigned
      Grade Corresponding Tier 90.00% - 100.00+% A 1 80.00% - 89.99% B 2 70.00% -
      79.99% C 3 60.00% - 69.99% D 3 59.99% or Less F 4 vii. Notification of Tier
      Ranking System II Scores Mortgagees will receive notice that quarterly TRS II
      scores are available via email after the conclusion of each fiscal year quarter.
      See the TRS II – Scorecard Calculation Methodology – Servicer Narrative for
      information on how to receive these quarterly notices. viii. Appeals (A) Basis
      for Appeals The only basis for an appeal by the Mortgagee receiving an “F”/Tier
      4 is disagreement with the data used by HUD to calculate the Mortgagee’s grade.
      If HUD determines that the Mortgagee’s “F”/Tier 4 grade rating was based on
      incorrect or incomplete data, HUD will recalculate the Mortgagee’s performance
      and will provide a corrected score. V. QUALITY CONTROL, OVERSIGHT, AND COMPLIANCE
      C. Mortgagee Monitoring 2. Institutional Mortgagee Monitoring Handbook 4000.1
      1724 Last Revised: 11/26/2025 (B) Time Frame Mortgagees receiving a grade of
      “F”/Tier 4 may appeal their final score no later than 30 Days after the issue
      date of the final fiscal year grade. (C) Process The Mortgagee must submit the
      appeal to HUD’s Deputy Assistant Secretary for Single Family Housing or their
      designee and request an informal HUD conference. ix. Public Availability of
      Scores and Grades All scored Mortgagees, except those which have chosen to opt
      out, will have their names and scores published on HUD’s Tier Ranking System
      website at the close of each calendar year, after all Appeals have been evaluated
      and after Mortgagees that have submitted appeals have been notified of the decision.
      x. Increased Incentives A Mortgagee earning a final annual fiscal year grade
      of “A” and Tier 1 score may qualify for increased incentives for the following
      calendar year.'
  judgment: false
