It’s a common belief that the company that originated your home loan is the same entity accepting payments on it. This may be the case for some mortgage lenders, e.g. big banks with a loan servicing division. Otherwise, mortgage loans are managed on a daily basis by another entity called the mortgage servicer. It’s only right that you should be properly acquainted with your mortgage servicing company.
Who Is Your Mortgage Servicer
From payment collection to dispute resolution, your mortgage servicer is on top of these matters. Its role is clearly different from that of a mortgage lender who directly makes the loan and a mortgage broker who finds a mortgage lender/s.
To determine who your servicer is, take out your payment coupon book or monthly mortgage statement. You can also visit MERS® ServicerID, which may have information about your mortgage servicer.
What Does a Mortgage Servicer Do
The mortgage servicer handles the day-to-day affairs of your mortgage. Its duties are included but not limited to the following:
- Collects your monthly mortgage payment and credits it to the proper entities, primarily: (a) owner of the loan – principal and interest, (b) government – taxes, (c) insurer – homeowner’s insurance, and (d) mortgage insurer – mortgage insurance premiums. Notably, your mortgage servicer is not a debt collector unless it acquired your loan when it was already in default status.
- Sends you an annual mortgage statement containing how much you have paid in interest and points the preceding year and your mortgage’s current balance.
- Handles or sets up your escrow account for your property taxes and homeowner’s insurance. The mortgage servicer will furnish you with a free annual statement detailing your escrow account activity.
- Responds to your inquiries and concerns. Your mortgage servicer is required by law to respond promptly to any written inquiry or dispute over fees and more. The mortgage servicer must send in a written acknowledgment of a qualified written request within 20 business days of receipt. It will be given 60 business days to make any corrections or resolve any dispute.
- Initiates foreclosure proceedings. If you missed too many loan payments, the mortgage servicer will initiate the foreclosure of your home subject to giving you mandated protections.
When There Is a Change of Servicing, Ownership
Throughout the life of the loan, it’s possible for the servicing of your mortgage to change hands. Your current mortgage servicer will give you notice at least 15 days before the effective date of the transfer, which is when the first mortgage payment is due at the new mortgage servicer’s address. The new mortgage servicer, in turn, will give you a notice within 15 days after the transfer effective date.
After the transfer, there is a 60-day grace period in place during which you can’t be charged a late fee if you inadvertently sent your payment to your old mortgage servicer.
Similarly, your loan could be bought and acquired by new owners. Within 30 days of acquiring the loan, they are required to give you a notice detailing their name, address and telephone number, the date they acquired your loan, and the person who will be authorized to resolve issues regarding loan payments. The new owner may also give you a notice of transfer of servicing rights, as applicable.
Justin McHood is a managing partner at Suited Connector and has been recognized by national media outlets as a financial expert for more than a decade.
