Mortgage servicing exceptions need clear ownership and deadlines

The Mortgage Bankers Association's 2024 servicing operations study highlights that servicing a non-performing loan costs $1,573, which is nine times more than servicing a performing loan at $176. Exceptions are identified as a quiet contributor to these higher costs.

To address these issues, the article proposes four key improvements: first, clearly defining what constitutes an exception to ensure it cannot be easily dismissed or parked. For instance, 'Escrow mismatch after transfer' is too vague, whereas 'Confirm which servicer holds the December disbursement and correct the running balance' provides specific actionable context. Second, assigning a single, named owner to each exception, following the IT service management principle of accountability, even when tasks are escalated. This contrasts with shared inboxes where responsibility can become diluted. Third, implementing tiered deadlines for exceptions, using regulatory limits as a guardrail rather than a target, with urgent issues affecting credit or foreclosure prioritized. Finally, making the status of these exceptions visible to call agents, including who is handling the item and when the next update is due, enabling them to provide borrowers with accurate and timely information without extensive searching.