A new Rhode Island law buried an expensive compliance requirement in mortgage servicer regulations—and most owners don't know it's coming.
Most Rhode Island retail mortgage servicers haven't heard of H7867, but if you service residential loans, you need to understand one provision hidden inside it: you may now be required to pay for a full independent audit by a certified public accountant every single year.
The requirement applies to any nonbank mortgage servicer that meets two conditions: you service 2,000 or more residential loans, and those loans are spread across 2 or more states. If both apply to your operation, you're covered under the new rule, which took effect upon the bill's passage.
If you're a smaller servicer or operate in Rhode Island only, this may not apply—but it's worth confirming your loan count and geographic footprint to be certain.
This isn't a light review. The independent CPA audit required under § 19-14.11-6(e) must examine:
This is a comprehensive financial and operational review, not a spot check. It requires your auditor to validate how you're managing money, loans, and risk across your entire servicer operation.
Annual independent audits are a recurring expense. The size of that cost depends on your loan volume, the complexity of your operations, and your auditor's fee structure—but budgeting for this as an ongoing line item is essential. Unlike one-time compliance costs, this repeats every year.
The requirement became effective upon passage of H7867, meaning the clock is already running. If you haven't already engaged a CPA firm experienced in mortgage servicer audits, now is the time to do so.
H7867 was designed to strengthen oversight of nonbank mortgage servicers—the companies that collect payments, manage escrow, and handle borrower communications on behalf of loan investors. The state wants independent verification that servicers have solid financial footing, strong internal controls, and proper risk management. For borrowers, that's protective. For servicers, it's a compliance obligation with teeth.
Failing to obtain the required audit or misrepresenting your audit status could expose your business to regulatory action. This is not optional for covered servicers.
Review your current loan servicing volume and geographic scope. If you hit the 2,000-loan threshold across 2+ states, contact a CPA firm with mortgage servicer audit experience and ask them to walk you through the scope and cost. Understand what documentation and systems access your auditor will need. Build this cost into your 2024 and 2025 budgets.
If you're unsure whether H7867 applies to your business, your state regulator or a compliance consultant can help clarify. The law is real, the requirement is binding, and the sooner you prepare, the smoother the transition.
Source: Rhode Island H7867, Section 3 (effective date), § 19-14.11-6(e) (audit requirement).