Chart of the Week: Components of Direct Servicing Operating Costs

In the previous week’s Chart of the Week, we focused on the major cost components of originating a loan in 2025. This week’s Chart of the Week focuses on the major cost components of servicing a loan based on data from the annual Servicing Operations Study and Forum (SOSF), MBA’s most detailed and comprehensive servicing benchmarking study representing almost 60% of the residential servicing market.

In total, annual direct servicing costs averaged $185 per loan in 2025, an increase from $181 per loan in 2024. About 75% of the costs ($136 per loan) are related to non-default specific costs such as customer service (call center and borrower communications, including billings), escrow and loss draft processing, servicing set-ups, payoffs and transfers, and executive management. The remainder of the direct servicing costs ($49 per loan) are related to default-specific costs such as collections, loss mitigation, bankruptcy, and foreclosure. Servicers attributed the increase in costs to a variety of factors including operationalizing agency guidelines, managing regulatory oversight, increased technology spending to improve customer experience and/or implement new procedures, and higher seriously delinquent loan balances compared to one year ago. 

Note: Direct servicing costs are defined as personnel, occupancy and equipment, outsourcing, and other operating costs needed to service residential mortgages. Direct servicing costs exclude 1) interest expense related to MSR assets, borrower escrows, advances, or prepayments; 2) unreimbursed foreclosure, REO, and other default costs above the investor reimbursement limit; 3) compensatory fees and indemnifications; and 4) corporate administration costs for legal, finance, human resources, network administration, parent allocations, etc.

Marina Walsh, CMB (mwalsh@mba.org)