Document challenges continued to be a leading cause of QC trouble for mortgage servicers in 2021, a year in which record high mortgage levels exacerbated the effects of process shortcomings.
It was a problem that left servicers unable to substantiate a wide array of process requirements, from documenting timely follow-ups to customer inquiries to missing disclosures on service transfer letters. In fact, documentation lapses made up 9 of the top 10 findings identified in MetaSource’s annual analysis of servicing QC findings.
This findings report discusses what the top 10 findings were, why documentation remains a main source of difficulty, and how to overcome document challenges and ensure compliance.
Document Management: A “Daunting Task” for Mortgage Servicers
Our 2021 analysis shows that missing documents left servicers unable to provide proof that they met requirements. In many cases, servicers’ underlying processes were fully compliant, but the supporting records were insufficient or inaccessible at the time of the audit.
Why was this the case? MetaSource’s QC Manager John Morales said it best. “Establishing and maintaining adequate document management processes can be a daunting task,” he said.
In some cases, Morales said, the documents required to substantiate compliance were notated in the servicer’s records, but the original document image, which can be difficult to retrieve, was not available at the loan level.
According to Morales, many servicers relied on notations and codes as proof that requirements were met. Unfortunately, this led to negative outcomes.
“Reliance on codes and notations alone to substantiate work completed can open the door to findings where a conservative interpretation of a guideline requires physical proof of the underlying document,” Morales said.
For example, customer inquiry receipt dates are considered questionable when sent without a date stamp. The same is true for electronically provided payment receipt dates and notations of sent breaches when copies aren’t available.
In other cases, mandatory documents were retrieved and stored but were purged after a liquidation or service transfer before audits were submitted for review. This, too, resulted in a lack of required documentation and, therefore, findings.
Top Servicing QC Findings for 2021
Here is the list of our top mortgage servicing QC findings for 2021:
- Incorrect set-up and timely premium payment of taxes, insurance, and mortgage insurance
- Failure to provide proof of payment within 24 hours of receipt due to inability to prove receipt date via various methods of payment acceptance (e.g. online, phone, and lockbox)
- Missing accounting histories where initial loan set-ups are completed after the first payment was submitted and now second payment is due
Download the full report to see the complete list of top servicing QC findings, learn why overcoming document shortcomings is more important than ever, and discover how to ensure compliance in 2022.
Download the 2021 Servicing QC Findings Report