MBA Chart of the Week: Servicing Costs per Loan: Performing v. Non-Performing

Based on the latest MBA Servicing Operations Study, fully loaded average costs associated with servicing performing and non-performing loans among prime servicers remain elevated compared to pre-2012 levels.   

The average cost of servicing a performing loan rose to $181 in 2015, three times higher than in 2008 when the cost per loan was $59. The average cost of servicing a non-performing loan grew to $2,386 in 2015, almost five times higher than in 2008 when the cost per loan was $482.   

Among major factors influencing this shift: lower average number of loans serviced per employee, particularly in default areas; additional personnel and quality control measures for ensuring regulatory compliance; technology initiatives; and operational re-engineering.  

The costs associated with servicing performing loans include the base direct costs to service any loan, regardless of default status: call center, technology, escrow, cashiering, quality assurance, investor reporting and executive management, among others. In addition, corporate overhead costs are included.   

The costs of servicing non-performing loans include the same base direct costs and corporate overhead, as well as the following additional costs: collections, loss mitigation, bankruptcy, foreclosure and post-sale, unreimbursed foreclosure and real estate owned losses, and other default-specific costs. Together, the costs are then divided by the average non-performing servicing portfolio for the year–loans 30 or more days delinquent and loans in foreclosure or in REO status prior to investor conveyance.  

To view the Chart of the Week, click  

(Marina Walsh is vice president of industry benchmarking and research with MBA; she can be reached at