In the newest episode of The Subservicing Scene, Mignonne Davis and Jen Hughes from Richey May’s Subservicing Oversight team explore one of the most fundamental components of a sound mortgage servicing compliance program: loan-level quality control testing.
Whether servicing is handled in-house or by a subservicer, loan-level testing isn’t a box to check: it’s a safeguard for regulatory compliance, risk management, and borrower satisfaction. By examining individual loans, servicers can catch discrepancies early, address potential issues before they escalate, and strengthen both operational integrity and investor confidence.
High-risk areas such as consumer complaints, defaulted loans, and force-placed insurance should receive particular attention. Errors and delays in these areas can directly affect the borrower experience, and robust testing can have the most significant impact.
As the industry embraces automation, the need for rigorous oversight grows. Testing helps ensure that technology functions correctly and that no errors slip through unnoticed. HUD, Fannie Mae, and Freddie Mac each offer guidance on testing practices. HUD recommends a 10% monthly loan sample, while Fannie Mae and Freddie Mac suggest periodic reviews aligned with the size and complexity of the portfolio.
Quality control testing supports more than compliance at its core; it upholds the transparency and accuracy standards defining strong servicing operations.
Watch Episode 5: Servicing Quality Control Testing below.
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If you found this video helpful, make sure to check out our three previous episodes of The Subservicing Scene.
