MBA NewsLink Q&A: Clarifire’s Jane Mason on Escrow’s Hidden Complexity in Default Servicing
Jane Mason is CEO and Founder of CLARIFIRE®, a workflow automation application. As an entrepreneur and innovator, Jane is a recognized leader in the financial services and mortgage industries known for finding new ways of doing business using the best that technology offers. She has over 20 years of experience in process automation and financial services technology and has received multiple awards and accolades in her local business community and on the national mortgage stage.
MBA NewsLink: Why is escrow relatively under-discussed compared to other servicing challenges?
Jane Mason: Escrow doesn’t come up much in servicing conversations because, under normal conditions, it works. Taxes and insurance are routinely calculated, and payments are collected and disbursed through well-established systems that rarely require intervention. However, that predictability relies on the assumption that a borrower is making regular payments. Once payments are interrupted, escrow stops being a background function and becomes something servicers have to actively manage.
When a loan enters delinquency, escrow becomes tightly intertwined with every step of the default process, from repayment plans to modifications and claim calculations. Any inconsistencies or missteps in managing escrow creates ripple effects that impact both borrower outcomes and investor reporting. But because escrow is so deeply embedded in servicing processes, it is often treated as a separate function rather than a critical component of the loan lifecycle.
MBA NewsLink: What operational changes occur in escrow management once a performing loan becomes delinquent?
Jane Mason: When a loan enters delinquency, escrow must be recalculated within the context of the borrower’s status, whether the borrower is making partial payments or not making payments at all. Everything shifts from a routine, automated process to a large manual process that consumes a servicer’s middle operations. This includes retroactively rebuilding escrow balances on spreadsheets, rerunning calculations outside standard cycles, and accounting for partial payments, suspense activity, and corporate advances.
Escrow management then becomes part of a broader sequence of activities that must be coordinated across multiple teams, including collections, loss mitigation, and investor reporting. Yet each of these areas may require different views of the escrow balance, depending on the stage of the loan. Additional events—like forbearance, loss mitigation evaluations, and foreclosure timelines—all introduce new variables that many servicing systems are not equipped to handle dynamically. Servicing teams are often interpreting and reinterpreting escrow data, adjusting figures based on new scenarios, and trying to align those adjustments with their downstream processes. The result is that escrow management moves from a smooth, controlled function to a highly fragmented and complex process.
MBA NewsLink: Why do servicers lean on manual escrow calculations when loans enter default? Why does their back office system of record hold real time escrow calculations hostage?
Jane Mason: Most core servicing systems are designed to operate under steady-state conditions. They perform very well when borrowers are making payments on time but do poorly when those patterns are disrupted. In delinquency, where payment timing, borrower behavior, and workout structures can vary widely, the predefined logic used in most systems often cannot accommodate the nuances required to produce an accurate, real-time view of escrow. As a result, they become a reference point rather than a reliable source of truth.
Even when the data is there, teams often don’t trust the system to apply the right rules at the right moment, or they can’t access data that reflects the current state of the loan. That limitation effectively “locks” escrow calculations within the system’s existing framework. When teams need immediate answers to evaluate a loan modification or prepare a claim, they cannot wait for their system of record to catch up. So, they extract data and perform calculations manually, and use spreadsheets to model scenarios. These workarounds continue as loans move through delinquency—not out of preference, but out of necessity. Yet each manual calculation creates a parallel version of the truth that must be reconciled at some point in the future, which increases the likelihood of inconsistencies and makes it harder to maintain alignment across teams.
MBA NewsLink: How does relying on spreadsheets affect operational risk and timelines?
Jane Mason: Because they rely on manual input and interpretation, spreadsheets introduce a level of variability that is nearly impossible to control at scale. For instance, someone may update numbers on one spreadsheet while others continue to use an older version. They also get emailed around and saved in different folders, so you never know which is the most current. There’s no clear, single source of truth. The same escrow balance may also be recalculated multiple times by different teams for different purposes, using slightly different assumptions.
From a risk perspective, this can have major implications. When a borrower is in delinquency, escrow factors heavily into key decisions like repayment plans, modifications, and claims. If the figures are not aligned across teams, the risk of errors increases, potentially affecting compliance with investor and regulatory requirements. You may also have documents and internal notes scattered across spreadsheets and emails, which makes it difficult to trace how escrow numbers were derived. Yet when questions come from auditors or investors, teams are often forced to retrace their steps and basically “reconstruct the reconstruction.” What started as a workaround turns into a bottleneck that not only increases the operational load on middle servicing teams, but diverts resources away from higher-value activities—such as getting borrowers the help they need.
MBA NewsLink: What practical steps can servicers take to make escrow management more predictable during delinquency?
Jane Mason: Improving escrow predictability in delinquency starts with treating it as an integral part of the default workflow rather than a separate exercise. Servicers need to define how escrow should be handled at each stage of the process and ensure that those rules are applied consistently. More importantly, escrow management needs to become event-driven. Delinquency, loss mitigation activity, and forbearance exits should automatically trigger recalculations that reflect the current state of the loan.
Equally important is reducing the reliance on disconnected tools and manual handoffs and improving visibility. That means moving those calculations into a structured, workflow-driven process—where data, rules, and actions are all connected—so that everyone is working from the same information.
This is where technology becomes essential. Servicers need workflow automation that can sit across systems and manage escrow as part of a coordinated, event-driven process rather than a series of manual steps. This enables escrow calculations to be triggered automatically, applied consistently, and tracked in a way that is transparent and auditable. It also helps leadership see how escrow is being managed across the portfolio and where delays are occurring, so they can identify and address issues before they escalate.
While escrow has long been treated as a background function, in default servicing, it’s a central driver of both borrower outcomes and operational performance. The servicers that navigate this well will be the ones that bring escrow into the core of their default strategy—where it stops being a source of friction and starts becoming a point of control.
(Views expressed in this article do not necessarily reflect policies of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes submissions from member firms. Inquiries can be sent to Editor Michael Tucker or Editorial Manager Anneliese Mahoney.)
