Several document-related issues that have plagued mortgage servicers for years increased during 2022, a recent report from QC and audit firm MetaSource shows.
Missing bankruptcy notices and proof of claims documentation topped the list of challenges servicers faced last year, the firm says in its report.
The analysis shows that servicers struggled with court-related documentation as a wave of mortgage delinquencies and borrowers seeking bankruptcy court protection created new demands.
MetaSource points out that these issues became worse as volume plummeted and workforces shrank.
Many servicers brought outsourced work back in-house or sold off parts of their portfolios throughout the year. Several were left with a disproportionate number of trouble-prone files as a result.
MetaSource Director of Mortgage Operations Hilarie Cline says poor processes for importing and indexing data and documents left servicers at a disadvantage that further complicated servicing transfers in an already complicated year.
“Some transfers happened four or five months earlier and they’re still going through the indexing process today,” Cline says. “It can create a real challenge if an agency – like Fannie, Freddie, Ginnie, or HUD – or an investor wants to audit.”
Here are the firm’s top QC findings for 2022:
• Missing bankruptcy notices and proof of claim documentation;
• Failure to apply payments within 24 hours of receipt;
• Incorrect set up of hazard insurance premiums and due dates;
• Inefficient monitoring and delays in filing for relief from bankruptcy stays on Chapter 7 and Chapter 13 filings; and
• Absence of current hazard insurance coverage details in the system of record during the audit period.
Photo: Bernd Klutsch